The Indonesian Employers Association (Apindo), which initiated the plan, has proposed revisions that would simplify the process of increasing minimum wages and decreasing severance pay, provide more opportunity for flexible employment through outsourced labor and also simplify layoffs.

The unions unanimously rejected the Apindo proposal, arguing that even though the law regulated minimum wage increases, the state had taken over the process to nullify the need for negotiation between trade unions and employers. They also said that employers rarely implemented the regulations on severance pay, while the provisions on flexible employment through outsourcing and contracts, as well as layoffs, were widely violated.

The conflict is a repetition of 2006 and 2016, when similarly controversial plans to revise the Manpower Law were canceled. This time, it is very likely that the revisions will be implemented, given the characteristics of newly reelected President Joko “Jokowi” Widodo, a former businessman who is known as a man of action and pro-investment.

The current conflict reflects the character of industrial relations in Indonesia. Industrial conflicts are inseparable from the history of labor policies, which has been pro-investor since the New Order. Industrial conflicts marked by union strikes and demonstrations show that social dialogue in industrial relations has not become a tool for creating industrial justice.

Social dialogue as defined by the International Labor Organization (ILO) refers to “all types of negotiation, consultation or simply exchange of information between, or among, representatives of governments, employers and workers, on issues of common interest relating to economic and social policy”.

Social dialogue is the best mechanism for promoting better living and working conditions, as well as social justice. It is an instrument, a tool of good governance and is relevant to any efforts to make the economy perform better and more competitive, and to make society more stable and more equitable.

The main prerequisites for social dialogue are: 1) the existence of strong and independent trade unions and employers’ associations with equal technical capacity and access to information for negotiating; 2) respect for the basic right of freedom of association and for collective bargaining; and 3) appropriate institutional support.

All prerequisites are met through Indonesia’s Trade Union Law of 2000 — which ratifies ILO Convention No. 87 on freedom of association and Convention No. 98 on collective bargaining — and through the establishment of
national and regional tripartite institutions.

So why is social dialogue still very weak and industrial protests still prominent? Despite a series of initiatives and technical assistance from the ILO and other international institutions to improve social dialogue skills and quality for trade unions and employers, why has social dialogue not become a feature of industrial relations?

Patrick Quinn, an adviser to the ILO in Indonesia, wrote many years ago in a report for the ILO that the barriers to creating social dialogue in Indonesia were due to the country’s lack of a collective bargaining culture, because of the weaknesses of trade unions and employers’ organizations and its history of strict government control on industrial relations issues.

The lack of trust among the actors in industrial relations is also a factor. Other technical barriers on the employers’ side are transparency regarding company conditions, refusal to negotiate and various union-busting strategies.

The barriers on the union side include rivalry between unions of the same company, lack of strategic information to negotiate, union leaders’ tendency to lobby employers that might weaken the union’s bargaining position.

At the national level, social dialogue institutions such as the Tripartite Council, wage councils and productivity councils are underutilized and thus do not contribute effectively in developing quality industrial relations. In addition, the central government neglects social dialogue and even effectively eliminated the role of trade unions when it issued Government Regulation No. 78/2015 on wages.

The regulation essentially and arbitrarily removes the tripartite negotiation process in determining minimum wage increases and places the government as the sole determiner of minimum wage increases. It is no wonder that this regulation sparked criticism and negative responses from trade unions, whose collective bargaining function in determining wage increases was effectively revoked.

Amid the increasingly intense global competition and the government’s mission to boost investment, industrial conflicts and poor social dialogue benefit no one. All parties — trade unions, employers and the government — must respect each other’s roles and functions to foster mutual trust as the key asset in negotiating, consulting and exchanging information.

Social dialogue is a strategic measure for creating industrial peace, which will in turn attract investment. The plan to revise the Manpower Law revision can be negotiated through sincere and quality social dialogue to meet the common interests of all parties: flowing investment, protected workers and productive business.

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The writer is a lecturer on industrial relations management at the Department of Management Parahyangan University in Bandung, West Java.

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