A national strike demanding higher wages for Indonesian workers failed to win much support yesterday, handing some welcome breathing space for the government, employers and investors just as Southeast Asia’s biggest economy begins to stumble.
Police said that fewer than 50,000 workers gathered in industrial centers in and around Jakarta to demand an increase in minimum wages and improved social welfare, a tiny fraction of the number who turned out a year ago.
Unions had predicted up to 3 million workers would join the walkout.
After years of stellar growth, Indonesia’s economy is looking less robust with the government repeatedly trimming its outlook for this year because of a softer global economy and a dip in domestic demand.
After earlier predictions of growth at well above 6 percent, the central bank now says it could be as low as 5.5 percent.
All Indonesia Workers, one of the country’s biggest unions, decided to stick to negotiations with the government and employers and not strike.
“There have been job cuts this year and if we anticipate more problems for the industries we work in like garments or textiles, then ... we have to limit the damage to our workers,” union head Andi Gani said.
The strikers were demanding a 50 percent increase in wages, which employers said would only further erode Indonesia’s already declining competitiveness in labor-intensive industries.
Manufacturers, including foreign investors, have repeatedly warned that one of the world’s biggest workforces — Indonesia is the world’s fourth-most populous nation — risks pricing itself out of the market if wages continue to surge.
Last year, labor unions mobilized hundreds of thousands of workers to push the government to raise minimum wages by an average of 44 percent in Greater Jakarta to 1.9 million rupiah (US$172) a month.
“If wage increases are too high, if we can’t compete with imported goods or labor costs in other countries, then we’d have to surrender and close our factories,” Employers’ Association of Indonesia head Sofjan Wanandi said.
“This year, the unions felt some job cuts already, so they understand what it means to keep raising wages,” he said.
The government has said that it plans incentives for labor-intensive industries such as textiles to prevent layoffs, but it has yet to implement the measures and there is widespread concern that Indonesia’s manufacturing industries are losing out to more competitive neighbors.
A number of analysts had expected labor unions to try to take advantage of next year’s general and presidential elections to win demands for higher wage increases.
Only about 7 million workers are union members. The majority of the workforce is part of the informal sector in a country where 40 percent of the population survives on about US$2 a day.
Local governments are set to announce new minimum wage levels next month.