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Indonesia's industrial relations system was remodelled along liberal-democratic lines, combining a North American-style focus on enterprise-level collective bargaining with the tripartite structures favoured by the ILO, after the fall of President Suharto in 1998. Part of this reform involved the loosening of constraints on the trade union movement. In Suharto's Indonesia, there was one formally-recognised union federation, whose 'member unions' were effectively just departments of a unitary structure. By 2005, there were dozens of unions and federations, and three confederations registered at the national level. Many employers continue to resist union attempts to negotiate at the shop floor or national level, but many others now recognise that they can no longer ignore unions in the workplace or in higher-level negotiations - particularly where those unions can demonstrate their potential to effectively organise workers.
The restructuring of the Indonesian trade union is important, not just because of increased freedom to organise, but because of the sectors in which union activity is focused. In contrast to the old Federation of All-Indonesia Workers Unions, which consisted primarily of factory workers, Indonesia's new unions emerged not only in traditional secondary industries, but also in tertiary sector occupations such as finance and journalism. Organising has also again become possible in the public sector, and employees in state-owned enterprises (SOEs), who had essentially been un-unionised in the Suharto period because they were not eligible for membership of the official union or the civil servants' association, KORPRI. Union density is extremely low in those industries partly because they started from a small or non-existent base, but also because many tertiary and public sector employees consider unionism to be the province of blue-collar workers.
Despite its limitations, this shift is significant for a number of reasons. First, it offers an alternative focus for the union movement. Structural change in Indonesia's economy, fed by capital flight and restructuring in labour-intensive manufacturing (where union density is highest) has led to significant membership losses when heavily-unionised factories have closed. Meanwhile outsourcing and casualisation of factory workforces has significantly undermined unions' ability to recruit new members in those industries. Second, workers in the newly-unionised white-collar service industries such as banking and finance have a more marketable skills base, along with better financial resources and education. Third, the distribution of banks and service industries, SOEs and government offices through the far-flung outposts of the Indonesian archipelago means that these unions have a much wider geographic reach than most manufacturing unions. For these and other reasons white-collar and public service unions represent a significant resource for the organised labour movement as a whole as it seeks to reposition itself in the 'new' Indonesia.
WATCHPOINT: White-collar and government sector unions give new direction to Indonesia's organised labour movement.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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