Sat, Dec 31, 2011 - Page 9 News List

As Indonesia’s economy continues to grow, discontent sets in

If the costs of dealing with restless workers increase, it could stem growth in a country that will depend on labor-intensive industries for the foreseeable future

By Sara Schonhardt  /  NY Times News Service, JAKARTA

As a flare-red sun set, a group of laborers in their 20s and 30s gathered on the bare floor of a battered house wedged beneath power lines in an industrial part of Jakarta. They were members of a confederation of multi-sector workers, one of the largest trade unions in Indonesia, whose slogan is: “Young, brave, militant.”

The men — all employees of the biggest hypermarket chain in the nation, run by the French retail giant Carrefour — said the company was violating their rights by paying them as contract workers, unprotected by strict Indonesian labor laws.

“Cheap wages and outsourcing, these are the main issues in Indonesia,” said Abdul Rahman, a Carrefour employee and the secretary-general of the union, known as KASBI, which represents about 130,000 workers.

He and others have been negotiating with the company for improved contracts since a strike by 1,000 workers in late August, but talks have gone nowhere. The same cycle has played out repeatedly since Carrefour entered Indonesia in 1998, said Rahman, 33, who has worked at the company for 11 years.

United by discontent, Rahman and his fellow activists are far from alone.

Indonesia, the largest economy in Southeast Asia, is among the top 20 economies in the world, with growth this year of about 6 percent. More than half of its 240 million inhabitants have entered the middle classes, according to the World Bank, which defines the middle classes as those who spend US$2 to US$20 a day. Still, many of them toil for barely a living wage, offering some of the cheapest labor in Asia.

In recent years, though, this labor force has watched certain sectors grow wealthy on rising commodity prices and booming domestic demand, and increasingly it is pushing for a greater share of company profits.

The greatest pressure has come from workers employed by Freeport-McMoRan, which is based in the US state of Arizona and controls the world’s largest recoverable gold and copper reserves in Timika, Papua. This month, its workers’ union agreed to a 37 percent increase in wages after a three-month strike.

Affordable labor is the main reason investors are attracted to Indonesia, in part to offset wage increases in China, said Indonesian Minister of Trade Gita Wirjawan, who was formerly the head of the country’s investment coordinating board.

However, recent strikes for higher wages by mine workers and supermarket clerks, not to mention pilots of the state-owned airline, Garuda, have disrupted business operations — and they could potentially deter foreign investments.

The Indonesian Manpower Ministry says there were 53 strikes in the first seven months of last year, the last period for which figures are available. By comparison, in 2008, the International Labor Organization recorded five apiece in the nearby countries of Thailand and the Philippines.

University of Indonesia economist Mohammed Chatib Basri, the director of the Institute for Economic and Social Research, said that frequent and prolonged strikes reduced profit margins and competitiveness. Sluggish Indonesian industries, such as garment manufacturing, are starting to pick up as wages rise elsewhere, he said, but if the costs of dealing with unrest and lengthy union negotiations increase, that could stem growth in a country that will depend on labor-intensive industries for productive employment for the foreseeable future.

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