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University of Tasmania 2008

Labour and management in development

JOURNAL Volume 9LmdLABOUR, POLITICS AND THE LAW:A LEGAL-POLITICAL ANALYSIS

OF INDONESIAS LABOUR LAW

REFORM PROGRAM

Jafar SuryomenggoloKyoto University

www.labour-management.utas.edu.au

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LABOUR, POLITICS AND THE LAW: A LEGAL-POLITICAL ANALYSISOF INDONESIAS LABOUR LAW REFORM PROGRAM1

Jafar Suryomenggolo

Kyoto University

Like many other late-developing countries, which have undergone a transition fromauthoritarianism to democracy, Indonesia has experienced fundamental changes in itseconomic and political system since the collapse of New Order regime in 1998. Under theneo-liberal agenda of transplanting the regulatory state (Robison et al. 2002), successiveIndonesian governments had implemented reforms designed to liberalise the market and tolimit the states strategic intervention, while at the same time setting up democraticinstitutions and improving the independence of judiciary system under the rubric of goodgovernance. Part of that transformation involves changes in labour law, known as the labour

law reform program, under which Indonesian industrial relations has been restructuredthrough a series of new labour laws which grant workers universal labour rights whilstintroducing labour market flexibility. Against the background of the absence of input fromorganised labour during the early transition period (Hadiz 1998; Aspinall 1999), and thepremise that the labour movements eagerness for democracy largely stems from its materialinterest in obtaining state support for its organisational viability, vitality and clout (Bellin2000), it is useful to observe how organised labour had perceived this reform package, whichdirectly affects their members well-being.

Drawing on examples from Latin America, Cook (1998) shows that labour law reform tendsto occur in two rounds. In the first, democratic round, labour law (re) institutes democraticmeasures which provide workers of labour rights, whilst during the second round, a greaterdegree of flexibility in labour relations is incorporated into the legal system. Caraway (2004)

uses this formulation to highlight factors important in the process of change in Indonesia. Thedemocratic round started soon after the fall of Suharto when Habibie ratified InternationalLabour Organisation (ILO) Convention No.87 on 5 June 1998 through an executive decision inthe form of a Presidential Decree2 and later, signed a technical assistance agreement with theILO immediately after the visit of ILO Direct Contact Mission in August 1998. Between June1998 and May 2000 the government ratified five fundamental ILO Conventions. As Caraway(2004) explains this phenomenon demonstrated how international pressure played animportant part during this round because the government wished to establish the regimesdemocratic, labour-friendly image internationally. It also provided, at least formally, a legalbase for workers to exercise their rights to organise and bargain collectively, giving them ademocratic guarantee of collective power. The second round began with the drafting of threelabour bills, the last of which was submitted to Parliament on 8 May 2000.3 Those bills

marked the intrusion of the concept of labour market flexibility into the labour law system.This was particularly strong in the case of the Manpower bill, which legalised contractual andoutsourcing employment practices which the government believed could solve the problemof growing unemployment rate, and in case of the Industrial Disputes Settlement bill, whichindividualised labour dispute through the newly established labour court in order to reducestate intervention.

Caraway (2004) uses this formulation to explain why Indonesian unions could preserveprotective regulations from the previous regime despite being too weak to resist labourflexibility, arguing that new regulations continue to protect labours collective rights and helpshield unions from further flexibilisation, arguing that, contrary to the race to the bottomthesis, that during the reform process Indonesian unions succeeded in upholding pro-labourprovisions and ensuring the Indonesian labour market remains rigid, something that has notoccurred in other countries. However, Caraways argument assumes the new regulations

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2 Jafar Suryomenggolo

carry the same protective characteristics as the previous regimes and overlooks the impact ofreform on the space available for the development of independent unionism. This articletakes a fresh look at how Indonesian labour unions have articulated and defended theirinterests in the transition period by examining their responses to the process of labour law

reform. It begins by discussing the process of the labour law reform program within theframework of the transition to democracy, and then describes how unions respondedtowards the new labour laws.

For the first time in over three decades, unions became an integral part of the labour lawreform process, and their involvement established them as a crucial actor in the newindustrial relations system. However, during the democratisation round, unions receivedlittle information about the process of labour law reform, with the exception of IndonesianProsperous Trade Union, Serikat Buruh Sejahtera Indonesia (SBSI), which was involved in thedrafting of the Trade Union Law. Even during the flexibilisation round that followed, unionswere poorly informed about the law reform process and were given little opportunity forconsultation. This prompted demonstrations, and later, the incorporation of some unionleaders into the parliamentary process through the creation of a Tim Kecil (literally a small

team), which led to unions active involvement in the process. Therefore, although it is truethat Indonesian unions benefited from international pressure during the democratic round,and later defended their position based on the legacy of pro-labour regulations from previousregimes in the flexibilisation round, a closer investigation on the unions responses towardthe reform process indicates that they were could not be considered favourable for the unionsin a long run. As expected, unions responses lent symbolic acceptance to the law within thelegal-political sphere. However, at the same time their lack of political power meant that theyfailed to fully articulate and promote their interests within the law reform process, leading tothe passing of laws that have ultimately imposed greater constraints on their future responsesand strategies.

SPSIs Involvement

The opportunity to establish genuine trade unions outside the government-sponsored unionAll Indonesia Workers Union, (Serikat Pekerja Seluruh Indonesia) after the fall of Suhartoprovided momentum for workers to establish their independence from the state repressionand patronage. Upon the ratification of ILO Convention No. 87, the number of unions listedwith the Department of Manpower mushroomed from one in 1997 to 30 federations in 2000and 86 federations by 2005. Most of the unions formed during at that early period were basedon groups of company unions in the same area/region, and generated by the help of NonGovernmental Organisation (NGO) activists (see Ford 2000).

In general, unionised workers saw the ratification as providing a legal instrument to protectthem in excising their right to organise,4 and had some expectation that the governmentwould follow the path of democratic rule. But when the government moved forward with theTrade Union bill, it failed to gain the support of many unions, particularly those represented

in the Committee Against the Oppression of Workers, Komite Anti Penindasan Buruh(KAPB), which considered that the Trade Union bill limited genuine freedom of associationpromised under the loosely-defined ILO Convention No.87. However, the governmentpressed on with the bill, and by 4 August 2000 it had entered into law. The Trade Union Lawgrants a number of protective measures for unionism. It acknowledges the right of workers toestablish unions and become members of the union of their own choice, as stated in the ILOConvention. It also obligates employers to allow union officials and members leave from theirwork obligations, in case as to perform union activities (Article 29). Moreover, as prescribedin Articles 28 and 43, it prohibits employers to obstruct union activities, by means ofdismissal, suspension, reduction of wages, intimidation and campaign against the formationof a union, and also contains a criminal penalty of up to five years imprisonment and/or 500million Rupiah fine for such violations. The promulgation of this law made employers aware

of their obligations and portrayed the government as pro-labour.5

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Labour, Politics and the Law: A Legal-Political Analysis of Indonesias Labour Law Reform Program 3

However, unions feared that the government would use the provisions of the law to controlthem. Unions concerns over its content were not without reason since article 38 of the lawallows the court to dissolve a union whose ideology is in breach of the 1945 Constitution orPancasila, or if union officials are convicted for crimes against national security. Indeed, SBSI

was the only union to welcome the law. This was largely due to the fact that it was the onlyunion involved in the drafting process.6 Although many observers are cynical about SBSIsinvolvement, at that time, of the 30 newly registered unions only SBSI had a firmlyestablished organisational structure. Formed in 1992, SBSI had a strong plant level unionmembership and had developed lobbying skills, as well as access to significant internationalsupport and financial resources. These characteristics made SBSI different from other unions,which were still struggling to establish themselves, in that, unlike its less-developedcounterparts, SBSI had the organisational capacity to engage itself in the formal politicalarena.

However, SBSIs involvement during the drafting of the Trade Union bill was only madepossible by a formal invitation from the government (which at the same time had asked ILOfor its approval for the substance of the bill) to present its opinions in a General Public

Hearing, Rapat Dengar Pendapat Umum (RDPU), during the parliamentary session. Afterreleasing SBSIs chairperson Muchtar Pakpahan from jail, the government felt that it wasnecessary to involve him during the drafting process in order to gain the trust of theinternational community. It should be noted that SBSI was the first social movementorganisation to get an invitation not only to attend, but also present opinions in, aparliamentary session. During the New Order regime no social movement organisation couldattend parliament, let alone obtain an opportunity for a public hearing. The new governmentrecognised that international support for SBSI meant that SBSIs organisational involvement inthe process could boost governments credentials concerning its commitment for labourrights. Although other unions and some NGOs obtained invitations to the same publichearing at a later stage, SBSI was singled out as being capable enough to be drawn into, andengage in, the political arena.7 It was therefore possible for SBSI to influence the drafting of

Trade Union bill and even, it was claimed, proposed some articles incorporated in the bill.While SBSI was busy with its parliamentary mission on the Trade Union bill, other unions

were distracted by campaigns for the annulment of Labour Law No.25/1997, a legacy of theSuharto period.8 Unions arranged rallies and demonstrations based on their rejection of the1997 Labour Law, but not on the Trade Union bill. Unions considered the implementation ofthe Labour Law to be more threatening because they believed the government would give itpriority over the Trade Union bill, since it had been postponed twice since its promulgationin 1997. They hoped a union victory over the Labour Law would encourage the governmentto abandon the Trade Union bill, while some national unions argued that the governmentshould have had annulled the Labour Law first before proceeding on the promulgation ofTrade Union bill (Kompas 6 March 2000). But the government had different considerations.Another postponement for the Labour Law was granted, but only a month later the TradeUnion Law was promulgated.

Union Mass OppositionThe promulgation of the Trade Union Law signaled the end of the democratic round of thelabour law reform and the beginning of the flexibilisation round, with two bills (theManpower bill and the Industrial Dispute Settlement bill) already in line to be promulgated.This time, some national unions affiliated to KAPB actively sought information about thedrafting process of those two bills since rumours were circulating that the bills would bepromulgated by the end of September 2000 (Kompas 13 September 2000). Their proactivestance was markedly different from their attitude during the processing of the Trade Unionbill, when they relied only on an invitation from the Parliament to engage in theparliamentary process.

The national unions involved in the KAPB were aware of the fact that the discussion ofTrade Union bill in the parliamentary session was completed in a relatively short timeframe

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less than three months between its submission to promulgation and that the parliamenthad agreed to enact the bill having only consulted with SBSI and SPSI (Kompas 20 July 2000).They did not want to make the same mistake with these new bills. Backed by some Jakarta-based labour NGOs, they called for an additional public hearing in the formal discussion of

the two bills (Kompas 25 August 2000) and insisted that the Parliament listen to theiropinions (Kompas 13 September 2000). They also expressed concern on the substances of thebills, which were very similar to parts of the Manpower bill.9 It is important to note, however,that in subsequent protests, unions rejection of the bill was still based on the erosion ofworkers rights, especially the right to strike and dismissal procedures, and the lack of unionparticipation during the parliamentary process, whilst the discourse of flexibility remainedunmentioned. Their continued focus on maintaining the rights they had gained through thedemocratisation round of the reform meant that unions failed to recognise the role theManpower bill was intended contribute to the construction of a flexible labour regime, in linewith the governments market-oriented policy to create more jobs.

In addition to inter-union discussions, unions affiliated to KAPB and SBSI producedcounter draft bills (draft tandingan) in the hope that they could promote alternative

formulations for the bills should they be invited to address a parliamentary session. Althoughthese counter draft bills differed in form and content, they all emphasised restrictions ondismissal procedures.10 As the discussion among union organisers became more and moreintense, the process in parliament seemed to stall. Until June 2002, there was no news aboutwhether the two bills were to be promulgated or not. Many unionists had stopped talkingabout the bills, although the issue was not completely abandoned.11 Some minor demandsfor amendments to the bills were still articulated (see for example, Jakarta Post 4 July 2002)but the formulation of counter draft bills was no longer a priority.

Suddenly the issue emerged again three months later, when parliament announced that itintended to enact first the Industrial Dispute Settlement bill, and then the Manpower bill,soon after (Jakarta Post 10 September 2002). The national unions affiliated to KAPB were

shocked at this announcement and called for a general demonstration in front of theParliament building (Kompas 13 September 2002). By 23 September 2002 those unionsengaged in a massive demonstration that forced Parliament to postpone the bills enactment(Kompas 24 September 2002). This was the first time since the controversy around the 1974Marriage Law that a social group had forced the parliament to postpone the promulgation ofa law. At that point, the unions had realised the effectiveness of consolidated action indefending their collective interests.12 On the other hand, that collective action alarmed boththe government and employers about unions potential strength. It changed their perceptionthat unions were no longer a minor actor, as they were under the New Orders PancasilaIndustrial Relations system (see Ford 1999), but had become a serious threat that may upsetthe balance of harmonious industrial relations and harm the investment climate. Unions weretaken seriously after this demonstration, in contrast to the period in which the Trade Union

bill was discussed, when unions were only addressed in a token manner in order to obtaintheir support.

Incorporating the Unions: The Tim Kecil 13The 23 September demonstration in Jakarta triggered waves of opposition in other cities. InSemarang, Central Java, militant union activists formed a coalition to oppose the enactmentof both bills (Bernas 25 September 2002), while some local unions affiliated to KAPB inSidoardjo, East Java, successfully pressed the local parliament, Dewan Perwakilan RakyatDaerah (RDPU), to sign an agreement to reject the Manpower bill (Kompas 26 September2002). This was the first time since 1998 that unions succeeded in coordinating massivedemonstration on the same issue in a number of cities.Facing this widespread negative response from the unions, 14 the Parliament realised it couldnot pass the bills without provoking even more opposition, so adopted another strategy. In

less than a week, Surya Chandra Surapaty in his capacity as Chair of the specialparliamentary team (Pansus, Panitia Khusus), moved to facilitate an informal meeting with

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unions and employer association to find solutions concerning the Manpower bill (Kompas 2October 2002). In that meeting he was accompanied with Herman Rekso Ageng, anothermember of the Indonesian Democratic Struggle Party, Partai Demokrasi IndonesiaPerjuangan (PDIP), the party of the then President Megawati. After intervention from Jacob

Nuwa Wea (then Minister of Manpower, an active member of PDIP, and also GeneralChairperson of SPSI), some union leaders were invited to subsequent informal meetings onNovember 7 and by November 12. This group later became known as the Tim Kecil (seeTable 1).15 Union leaders disagreed on the benefits of this Tim Kecil would bring for thelabour movement, and moreover, for the unsettled situation surrounding the Manpower bill.While some unionists were wary about the utility of such an informal meeting, others saw itas an opportunity to later influence the parliament the same way as SBSI did in the TradeUnion bill. Thus in this flexibilisation round, with the creation of Tim Kecil, union leaderswere split, those who were members of the Tim Kecil on one side, and those who continuedto be excluded from the negotiating table on the other.

Table 1. Members of Tim Kecil for the Manpower Bill

Name Union

Ari SunarijatiDirector of the Bureau of Women and Children, Federation of AllIndonesian Workers Union Reformasi (FSPSI-Reformasi, FederasiSerikat Pekerja Seluruh Indonesia Reformasi )

Arief SoedjitoChairperson of the Federation of Agriculture and Plantation WorkersUnion (FSPPP- KSPSI, Federasi Serikat Pekerja Pertanian danPerkebunan)

Chaerul BeyChairperson on Advocacy of the Federation of Chemical, Energy andMining Workers Unions (FSPKEP-KSPSI, Federasi Serikat Pekerja

Kimia, Energi dan Pertambangan)

Indra MunaswarGeneral Secretary of the Federation of Textile, Clothing and FootwearWorkers Union Reformasi (FSPTSK Reformasi, Federasi SerikatPekerja Tekstil, Sandang dan Kulit)

KusharyantoVice Chairperson of the Forestry, Wood and Agriculture Union,Indonesian Prosperous Trade Union (SBSI, Serikat Buruh SejahteraIndonesia)

Martin SiraitGeneral Chairperson of the Indonesian Union of Maritime Workersand Fishermen (SBMNI, Serikat Buruh Maritim dan Nelayan

Indonesia)

Muhammad RodjaGeneral Secretary of the Federation of All Indonesian Workers UnionReformasi (FSPSI Reformasi, Federasi Serikat Pekerja SeluruhIndonesia Reformasi)

Rekson SilabanChairperson of the Indonesian Prosperous Trade Union, (SBSI, SerikatBuruh Sejahtera Indonesia)

Said IqbalGeneral Secretary of the Federation of the Indonesian Metal WorkersUnion (FSPMI, Federasi Serikat Pekerja Metal Indonesia)

Sebastian Salang General Secretary of Independent Workers Union (PBI, PerserikatanBuruh Independen)

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After the two initial meetings, and upon receiving a formal parliamentary mandate ashe called it signed by Surya Chandra Surapaty and Jacob Nuwa Wea, Herman ReksoAgeng arranged and facilitated eight subsequent meetings in NovemberDecember 2002 andJanuary 2003.16 He added four more issues to the agenda for the meetings: the right to strike,

dismissal procedures, outsourcing and contract-based employment.17 The first two issueswere on the agenda because they were main points on which the unions had opposed theManpower bill, while the latter two were added in the process of the meetings when it wasrealised that those issues were not specifically regulated.18 The term outsourcing was thusfirst discussed amongst the members of Tim Kecil and later included into the first version ofthe agreed draft (naskah kesepahaman) of the bill. The selection of these four issues clearlyindicated that the government felt a need to gain labours consent for the formal introductionof the idea of flexibility. By 3 January 2003, the final version of the agreed draft was presentedto the parliament as an agreement on particular articles between unions and employers underthe guidance of Herman Rekso. Although the unions in the KAPB declared their oppositionto the bill and refused to accept the Tim Kecil as being representative of unions generally(Kompas 8 February 2003), this time the Parliament enacted the bill and promulgated it on 25March as the Manpower Law No.13/2003.19

As Caraway (2004) notes, the Manpower Law preserves many of the parameters from theprevious regulations for individual workers such as prohibitions of discrimination inemployment practices and the basic forty-hour work in a week. However, it also broughtsome significant setbacks regarding workers collective rights. 20 Although the lawacknowledges the workers right to stage strike as a fundamental, it allows the legal use ofstrike-breakers and provides no room for the occurrence of secondary strikes, which werepermitted under the previous law.21 In addition it only grants the arrangements of collectivelabour agreements (Perjanjian Kerja Bersama) to the dominant union in a workplace, thusmaking it impossible for other small unions to have a bargaining with their employer, aspreviously permitted.22 Condemned by KAPB as legalising the modern form of slavery

which caused the decline in unions membership, the law condones the use of outsourcing inany industry, whereas previously it was allowed only in certain areas and of particularly inexport-oriented garment factories with stricter rules and conditions.23 Thus, the law posespotential structural threats for the development and practice of trade union rights.

Having succeeded in establishing the Tim Kecil as an extra-parliamentary institution,Herman Rekso went on to replicate the process for the Industrial Dispute Settlement bill. Hewaited until after the 2003 May Day celebration, which as expected was dominated byprotests against the new Manpower Law. 24 He then moved quickly on the IndustrialDispute Settlement bill, arranging the first informal meeting on 31 May while unions werestill preoccupied with the Manpower Law. Registered national unions were sent formalinvitations to attend for the meeting but not all attended. Those who came were divided intofour groups in according with the representation principle composed by the Department of

Manpower which classifies unions for their seats on the ratio of 5:2:2:3 for KSPSI, KSPI, FSPSIReformasi and, lastly, SBSI and other unions.25 Afraid of facing further accusations of notbeing representative, this time the members of Tim Kecil were selected from, and by,representatives of the attending unions (see Table 2).

Table 2. Members of the Tim Kecil for Industrial Dispute Settlement Bill

Name Union

Abdul HakimGeneral Secretary of the Brotherhood of Indonesian MuslimWorkers (PPMI, Persaudaran Pekerja Muslim Indonesia)

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Abdul Salam DaudeChairperson of the Federation of Indonesian Industrial WorkersUnion (Gasbiindo, Gabungan Serikat Buruh Industri Indonesia)

Buyung MarizalGeneral Secretary of the Federation of Cigarette, Tobacco, Food andDrink Workers Union (FSPRTMM-KSPSI, Federasi Serikat PekerjaRokok,Tembakau, Makanan dan Minuman)

Firman HadiGeneral Chairperson of the Federation of All Indonesian TeachersUnion (FSPKSI-KSPSI, Federasi Serikat Pekerja KependidikanSeluruh Indonesia)

Franky TanResearch Division of the Federation of All Indonesian WorkersUnion Reformasi (FSPSI Reformasi, Federasi Serikat PekerjaSeluruh Indonesia Reformasi)

Lainsamputty FritzOfficer of the Federation of Construction and Public WorksWorkers Union, (FSPBPU-KSPSI, Federasi Serikat PekerjaBangunan dan Pekerjaan Umum)

Makmur KomaruddinVice Chairperson of the Federation of Indonesian Metal WorkersUnions (FSPMI Federasi Serikat Pekerja Metal Indonesia)

Miyadi SuryadiGeneral Chairperson of the New Federation of IndependentWorkers Union (Gaspermindo Baru, Gabungan Serikat Pekerja

Mandiri Indonesia Baru)

Nurdin SingadimedjaChairperson of the Federation of Textile, Clothing and FootwearWorkers Union (FSPTSK-KSPSI, Federasi Serikat Pekerja Tekstil,Sandang dan Kulit)

Ruslan EffendyGeneral Chairperson of the Indonesian Peoples Labour Union(SPRI, Serikat Pekerja Rakyat Indonesia)

Sebastian SalangGeneral Secretary of the Independent Workers Union (PBI,Perserikatan Buruh Independen)

Shamiri SandjaChairperson of the Federation of Tourism Workers Union (FSPP-KSPSI, Federasi Serikat Pekerja Pariwisata)

Herman Rekso also set up another group known as Resource Persons (Narasumber)whose members were drawn from the previous Tim Kecil (see Table 3). The function of thisgroup was far from clear, and often became blurred with the function of the new Tim Kecil.This may have been because none of its members really know what the actual purpose of thisgroup was, or because they were prepared to take whatever role was set by in order toremain involved the process. It seemed that the involvement of these Resource Personscould provide more legitimacy for the process because it implied that union representatives

were not only participating, but were being guided by senior unionists.26

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Table 3. Resource Persons

Name Union

Arief Soedjito Chairperson, FSPPP-KSPSI

Indra Munaswar General Secretary, FSPTSK Reformasi

KusharyantoMember of the Organisational Consultative Council (MajelisPertimbangan Organisasi), KSBSI

Said Iqbal General Secretary FSPMI

After formulating a sketchy draft bill in a three-day discussion in July with three labour lawprofessors, Herman Rekso began to arrange informal meetings in August with the Tim Keciland the resource persons. The three professors rather than members of the Tim Kecildominated the debate because much of the discussion focused on legal technicalities. 27 As aresult, the process was much shorter, and an agreed draft was produced within only twomonths. By November it was handed over to the Parliament house for an approval in theGeneral Meeting of the parliamentary assembly.

The Tim Kecils involvement was not totally ineffective. According to Firman Hadi, amember of Tim Kecil, their participation during the meetings led to the inclusion of somefavourable provisions for the final draft of the Industrial Dispute Settlement bill, such as theidea that the new system would be free of any charge for labour and that unions, not onlylawyers, can have a legal standing before the court to represent their members. 28 This wasindeed a crucial achievement that could only be gained with unions participation inside theprocess.

The Industrial Dispute Settlement Law established a new system of formal judiciary courts,known as Industrial Dispute Courts, Pengadilan Perselisihan Hubungan Industrial (PPHI), tosettle all labour disputes regardless of the nature of the disputes origins. By abolishing theexisting Labour Dispute Settlement Committees (P4D/P, Panitia Penyelesaian PerselisihanPerburuhan), the law blocked the possibility for continued active state intervention in labourcases, since the role of government is now limited only as a mediator based on the request ofdisputing parties. It also promoted the individualisation of labour relations by grantingaccess for any individual workers to bring any cases they may have to the court withouthaving to be represented by a trade union.29 This undermined unions ability to defend thecollective interest of workers just as they were starting to develop their institutional capacity.Moreover, unlike the P4D/P system, which operated on an informal set of procedures, theIndustrial Dispute Court was established as part of the District Civil Court (Pengadilan

Negeri).30 As a result, its litigation procedure is based on the formal civil procedures, whichposition individual workers as common laymen. In practice, this has forced most workers toseek legal expertise, which many unions are still lacking. Therefore although individualworkers may hypothetically use the court system, it is difficult to see how an individualworker could win in defending his/her interests alone before the Industrial Dispute Courtwithout being backed up by unions organisational power.

Unions in Legal PoliticsBy 2005 the labour law reform program had resulted in the ratification of five ILOconventions and the production of three new labour laws. As the discussion above shows,national-level unions demonstrated different attitudes towards the regulations itself andreacted differently towards the process through which those regulations were produced in

the democratic round and the subsequent flexibilisation round. The union movementgenerally found the regulations enacted during this democratic round acceptable with theexception of some parts of the Trade Union bill because they saw them as reinstating union

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rights. Indeed, the ratification of ILO conventions was welcomed, and was used strategicallyby many unionised workers to legalise and register their newly formed organisations.However, the union movement did not actively seek to influence the legal policy-makingprocess at this stage. In fact, SBSIs involvement in discussions of Trade Union bill was

initiated by the government in order to secure its political legitimacy and develop aninternational image as a labour-friendly regime.

In contrast, unions actively engaged in legal politics during the flexibilisation roundbecause they saw the Manpower and Industrial Dispute Settlement bills as potentiallyleading to an erosion of their rights, and thus as an attack on them. Unions began by taking adefensive stand, but became more vocal over the course of time, ultimately mobilising massopposition, in contrast with during the democratisation round when there was no significantcollective unrest in showing unions rejection against the drafting of Trade Union bill. Thismove had succeeded in drawing the attention of the parliament. The shift in unions responseduring the flexibilisation round clearly illustrates the dynamic interaction between labourand the law. It shows how unions reacted to the law and the ways in which lawmakers later

co-opted the issue in drafting the law by creating the Tim Kecil to accommodate unionsposition.

Other country studies suggest that what happened to Indonesian unions during the labourlaw reform process is not unique. Unions everywhere have difficulty responding promptly tolabour law reform as it comes from government not unions, and generally seeks to liberalisethe labour market in order to boost the countrys competitive advantage under globalisation.For example, the Korean Confederation of Trade Union (KCTU), the independent union inSouth Korea, faced a difficult situation when considering whether or not to participate whenthe Korean government launched labour law reform after the 1998 financial crisis (Lim et al.2003). When it did finally decide to participate, its leaders faced severe criticism from therank-and-file members for accepting a layoff clause (Koo 2001). Likewise, New Zealandunions were heavily pressured to become involved in that countrys neo-liberal labour law

reform agenda in early 1990. Despite unions persistent resistance in the early stages of theprocess, the government succeeded in convincing them that the reform was needed topromote economy recovery (Dannin 2001). As Dannin shows, this was achieved through aseries of public relations campaigns, opinion polls, and also mythmaking before the reformprocess began.31 Ultimately, the unions could not oppose the neo-liberal reform agenda eventhough the rank-and-file expected their leaders to oppose it. These studies show there is amixture of positions on union involvement. Some condemn unions participation becausethey see it as co-optation, while others consider that unions should get involved and workwithin the process to deliver change. This was also the case in Indonesia during the labourreform process.

As noted above, KAPB had refused to accept the Tim Kecils legitimacy as a representativeof unions in general, rejecting the agreed draft (naskah kesepahaman) on these grounds.Further, KAPB considered that the involvement of Tim Kecil demonstrated that its membersbecome integrated into the reform process and implicitly supported the governmentseconomic policy agenda, even where it had anti-union implications for labour policy. TimKecil participation was evaluated on the results of its deliberations, which included someerosion of Indonesias protective labour regulations. Meanwhile members of the Tim Kecilinsisted that they were defending workers interests. They reasoned that their participationwas necessary because unions had to learn to deal and fight for their interests on negotiationtable in Indonesias new democracy. They pointed out that their participation brought abetter result for workers protection in terms of maintaining protective regulationsconcerning women workers and also by regulating and limiting the excess of contractwork.32

Regardless of its outcomes, it is clearly important that unions were invited to participate inthe process something that had never happened before 1998. During the New Order

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regime labour union had never been active in the drafting process of labour regulations sinceSPSI, the sole labour union, was not an independent player within the Pancasila industrialrelations. The unions consent over labour regulations was assumed by government and later,ceremonially institutionalised in the Tripartite Body of Cooperation (Lembaga Kerjasama

Tripartit Nasional) involving government, employers and workers. Hadiz (1997: 91) notesthat in the early and mid 1980s the then Minister of Manpower Sudomo used to dispelledforeign criticism of his policies as Minister of Manpower by citing that they were theproducts made through consultations and cooperation with union in the formal discussionsof this tripartite body.33 But the reform program opened up opportunities for the newlyestablished labour unions to prove themselves as independent actors free from statepatronage, and thus worthy of involvement in the process of shaping a new industrialrelations system. This process started during the democratisation round with SBSIsceremonial involvement in drafting the law and then deepened during the flexibilisationround as labour unions were increasingly acknowledged as an actor and expected to take arole in the reform process.

Labour Law or Politics?The transitional period indeed gave Indonesian unions more freedom. The politicaltransformation since 1998 have granted workers legal guarantee to organise and form unionsand to collectively defend their members interests. More than that, it offered them a newarena for participation and gave them a role within the legal-political system. Labour unionswere the first social group that demanded to be involved in the drafting of Indonesias legalframework. It then permitted labour unions to participate in the drafting process to protecttheir rights and freedoms, and also where possible, to work within the system, by definingdemocratic provisions as in the case of Trade Union Law. The transition period has securedfor unions a position where their representatives are included and their voices are considered,in the drafting of any labour regulation.

However, this extent of unions involvement was limited, since their response towards thelabour law reform and their participation within the drafting process was in fact largelydetermined by the space accorded to them by the government. The form that unionsparticipation took stemmed from the governments invention first in order to gaininternational recognition, in case of SBSIs involvement, and later to channel unionsopposition, in case of the Tim Kecil. During the democratic round, the government needed tobuild a different image from the oppression of workers under the New Order period, and soallowed SBSI to be involved. During the flexibilisation round, the initial impetus of creatingthe Tim Kecil initiative may have been grounded on the fear of collective labour militancy ashad shown in the demonstrations of September 2002 if, as Ford (2004) argues, fear ofcollective labour militancy could be traced back to the business communitys concern aboutthe rapid rise of unionism. This made it necessary for the government to obtain unions

support for its program in order to control economic and political risk. In this regard, unionsrole in the legal-political arena was defined not as policy-makers but as a means to improvethe governments international image during the democratisation round, and to ensure thatthe drafting process was accomplished without further disruptions during the flexibilisationround.

The flexibilisation round of labour law reform shows how juridification of labour lawssteered the unions into a binding legal framework, securing continuous control over them, aswell as their adaptation to the governments economic policy (Simitis 1987). From thecreation of Tim Kecil, it is evident that the legislators had tried to institutionalise the presenceof labour unions in the hope that they would be able to ensure unions consent asserting thatunions had been participating during the whole process. On the other hand, unionistswillingness to be involved in the drafting process and also becoming members of the Tim

Kecil in hope of better representing unions concerns provides insights into unionsunderstanding of, and expectations from, labour legislation. Unionists tend to take it for

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granted that labour law reform would be in the interests of their members, and that thegovernment will enforce it. In doing so, they overemphasise the rhetorical importance of law,and ignore the historical disjuncture between legislation and practice in other words, theyexaggerate its instrumental utility. It is clear from the above description of unions responses

that unions performed the expected role as to provide a symbolic acceptance to thegovernments labour law reform program.34 As it was evident during the reform process, itoccurred because unions focused so much of their efforts on the technicalities of formal lawand governmental regulations, in the process overlooking the initial reasons of governmentswillingness to allow them to participate the drafting process.

Even if unions present a united front when entering the parliament, formal politics is not aneutral arena where unions can easily promote their interests. The fragmentation ofIndonesian labour movement may put constraints and deliver problems in fostering theirinterests, but the present general political conditions pose much greater obstacles. During the1950s, organised labour in Indonesia were also fragmented, as Tedjasukmana (1958:25) notesthat there were as many as 150 national unions and several hundreds of local unions notaffiliated with any national unions, but still could manage to organise a Labour Faction

(Fraksi Buruh) inside the Parliament and deliver positive changes in labour regulations. Inthat period, Indonesian labour indeed enjoyed a greater degree of organisational freedom andlegal protections under the political system of a constitutional democratic regime (see Feith1962). In contrast, in this transition period, Indonesian politics is dominated by the predatorypower of the political oligarchy elites equipped with money-politics and political violence(Robison and Hadiz 2004). The reform process shows political elites who had been ready tocapture and seize any opportunity from the labour movement in order to secure theirpolitical power, and that the transition period has placed particularly strong political andeconomic constrains on the working class. These factors have prevented unions fromaccessing enough political space during the transition period unions to ensure theirindependent participation in Indonesias new democracy.

Unions ability to respond differently during the labour law reform process was alsolimited by their institutional capacity. The reform program began precisely as workersobtained the freedom to form unions and many of the unions were still in the very earlieststages of organising, and had yet to develop strategies for effectively articulating anddefending their interests. Instead of being able to take time to consolidate, they were thrustinto a situation where they had to respond to the labour reform program, which itself createdfurther obstacles for unions with regard to the labour market. In short, unions have had toconfront the challenges of labour law reform at a time when they are poorly positioned inpolitical arena and currently overwhelmed by the rapid changes their member-workers haveto face due to increasing flexibility in the workplace.35 In such a situation, the only wayforward is for unions to build themselves based on active membership and internalconsolidation rather than seeking political support from the state.

ConclusionThis article has described the fundamental transformation, which had taken place inIndonesian industrial relations since 1998 as a result of the labour law reform program. In theprocess of establishing a set of labour laws defining a new industrial relations system, thereform package provided a context for the dynamic interaction of unions with those new laws.As this paper has shown, unions responded differently toward the regulations produced inthe democratic and flexibilisation rounds of the reform process. The unions welcomed thedemocratic round because it involved the enactment of labour regulations supporting labourrights. During the flexibilisation round, unions initially responded negatively since the labourregulations produced were perceived to damage unions ability to organise, only to beincorporated within the special mechanism of the Tim Kecil, designed to channel andaccommodate that response.

The article has shown that those unions responses of involvement, opposition andincorporation, forced the government to recognise them as a crucial actor in industrial

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relations and as a stakeholder in the formation of the new system. The transition periodopened up new opportunities for Indonesian labour unions, as they were included in thedrafting process. However, although the reform process succeeded in enacting a new set oflabour laws, it failed to generate meaningful public involvement, either from the labour

unions or from society in general. And once established those laws created structuralobstacles that make it more difficult for independent unions to develop their strategies andorganisational skills, and thus limited the possibility that they can better represent workers inthe future.

REFERENCESAmiruddin and Masduki, T., 1997. RUU Ketenagakerjaan Pantas Meresahkan Buruh, Komisi

Pembaharuan Hukum Perburuhan, Jakarta.Aspinall, E., 1999. Democratisation, the Working Class and the Indonesian Transition, Review ofIndonesian and Malaysian Affairs, 33(2):131.

Bellin, E., 2000. Contingent Democrats: Industrialists, Labour, and Democratization in Late-DevelopingCountries, World Politics, 52(1):175205.

Caraway, T., 2004. Protective Repression, International Pressure, and Institutional Design: ExplainingLabour Reform in Indonesia, Studies in Comparative International Development, 39(3):2849.

Cook, M.L., 1989. Toward Flexible Industrial Relations? Neo-Liberalism, Democracy, and LabourReform in Latin America, Industrial Relations, 37(3):311336.

Dannin, E., 2001. Hail, Market, Full of Grace: Buying and Selling Labour Law Reform, Law Review ofMichigan State University-D.C.L., 2001(4):10891146.

Feith, H., 1962. The Decline of Constitutional Democracy in Indonesia, Cornell University Press, Ithaca.Ford, M., 1999. Testing the Limits of Corporatism: Reflections on Industrial Relations Institutions and

Practices in Suhartos Indonesia,Journal of Industrial Relations, 4199(3):371392., 2000. Research Note: Indonesian Trade Union Developments since the Fall of Suharto, Labour and

Management in Development, 1(3):110., 2004. A Challenge for Business? Developments in Indonesian Trade Unionism after Soeharto, In

Business in Indonesia: New Challenges, Old Problems, edited by M.C. Basri and P. van der Eng.,

Singapore: ISEAS: 21233.Hadiz, V.R., 1997. Workers and the State in New Order Indonesia, Routlegde, London and New York., 1998. Reformasi total? Labour after Suharto, Indonesia, 66:109124.Kolben, K., 2002. Labour Law Reform in Indonesia: An analysis of the Industrial Disputes Resolution

Bill, the Manpower Bill, and their Proposed Provisions. A Report, American Center forInternational Labour Solidarity, Jakarta.

Koo, H., 2001. Korean Workers: The Culture and Politics of Class Formation, Cornell University Press,Ithaca and London.

Robison, R., et al. 2002. Transplanting the Regulatory State in Southeast Asia: A Pathology of Rejection.Working Paper Series # 23, City University of Hong Kong, Hong Kong.

Robison, R. and Hadiz, V., 2004. Reorganising Power in Indonesia: The Politics of Oligarchy in An Ageof Markets, Routledge Curzon, London and New York.

Simitis, F.S. 1987. Juridification of Labour Relations In Juridification of Social Sphere: A Comparative

Analysis in the Area of Labour, Corporate, Antitrust and Social Welfare Law, edited by GuntherTeubner. Berlin/New York: Walter de Gruyter: 113162.

Suryomenggolo, J., 2004. Dinamika Perumusan Undang Undang Ketenagakerjaan dan RancanganUndang Undang Penyelesaian Perselisihan Hubungan Industrial: Apa, Siapa dan Bagaimana.Interim Report, Trade Union Rights Centre, Jakarta.

Tedjasukmana, I., 1958. The Political Character of the Indonesian Trade Union Movement, Monographseries, Modern Indonesia Project, Cornell University, Ithaca.

Notes

1 Thanks to Michele Ford for her sensitive reading, and to Mizuno Kosuke, Luke Arnold and thejournals anonymous referees for their critical comments on the initial draft. Any errors are, of course,my own.

2 Executive decisions occur outside parliamentary channels. The 1945 Constitution states thatratification of any international conventions and agreements should be made through consultation with

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and endorsed by the Parliament in a formal parliamentary session and be legalised under the form of anLaw.

3 Those three labour bills were the Trade Union bill Rancangan Undang Undang tentang SerikatPekerja/Serikat Buruh, RUU SP/SB), the Manpower bill -Rancangan Undang Undang tentang Pembinaan danPengawasan Ketenagakerjaan, RUU PPK), and the Industrial Dispute Settlement bill -Rancangan UndangUndang tentang Penyelesaian Perselisihan Hubungan Industrial, RUU PPHI), which became known as thePackage of three labour bills. Several versions of those bills came with various titles with slightlydifferences, and over the course of time, those titles were revised in accordance with the Parliamentsdiscussion process.

4 Some labour cases handled by the Legal Aid Institute -LBH, Lembaga Bantuan Hukum) were based onthe argument that the government had ratified ILO Convention No.87 and thus must guarantee theimplementation of its principles by permitting workers to organise.

5 Nonetheless, employers had found a different way to sack union activists by accusing them of criminalconduct. A number of these labour criminalisation cases rose during 20002002 period Kompas, 13September 2000; Media Indonesia, 25 May 2001; Suara Merdeka, 10 January 2002). To date, no employerhas been sanctioned under article 28.

6

SBSI even claimed that some articles of the Law came from their recommendations Kompas, 20 July2000).

7 SBSI could also obtain inside information from Parliament since one of its cofounder, Jacobus Majong,was a Member of Parliament.

8 For more details on the controversy around Labour Law No.25/1997, see Amiruddin and TetenMasduki 1997).

9 Over the course of time the Department of Manpower produced several versions of both bills.

10 Counter draft bills were produced by Serikat Buruh Sejahtera Indonesia SBSI, Indonesian ProsperousTrade Union), Gabungan Serikat Buruh Mandiri GSBM, Federation of Independent Unions), FederasiSerikat Buruh Paguyuban Karya Utama FSBPKU, Federation of Karya Utama Unions), Federasi SerikatPekerja Metal Indonesia FSPMI, Federation of Indonesian Metal Workers Unions), Front Nasional

Perjuangan Buruh Indonesia FNPBI, National Front of Indonesian Workers Struggle).11 During this time, unions were preoccupied with the issue of Ministerial Decree No.150/2000.Caraway 2004) locates the controversy regarding this Ministerial Decree in the context of unionsuprising organizing power and the shift of employers move to constitute Apindo as an effectiveorganization rather than relying on the government, as was the case during the Suharto years, whileFord 2004) points out how this controversy gave rise to concerns from foreign investors over unionmilitancy.

12 Interview with Timboel Siregar, 29 August 2003.

13 The description of the formation and meetings of Tim Kecil presented here is based on Suryomenggolo2004).

14 APINDO also rejected the bill, which it considered was prolabour. APINDO indicated that it wouldprefer to have bipartite negotiations with the unions instead of tripartite meetings under thegovernment, to settle this issue Tempo Interaktif, 8 October 2002). However, this massive labourdemonstration was the basic concern of the Parliament.

15 The union leaders involved in the Tim Kecil had an extremely diverse profile. Structurally, they wereall highranking union officials, but they had very different backgrounds. Many of them had longstanding credibility with their members, but others, particularly from unions established after 1998,were new to union organizing. Some members were idealists who were ill informed about politicalprocesses, while others sought political sponsorship by the state. This diversity in background andinterest contributed to their inability to articulate a common agenda.

16 These meetings were held in various fivestar hotels around Jakarta, not in the parliament building.Herman Rekso Ageng claimed that the budget and also transportation fees for each meeting) did notcome from the parliamentary budget, but rather was drawn from his own pocket. Although conductedoutside the parliament building, this kind of mechanism is fully acknowledged and even documented

in the parliaments Rapat Paripurna General Meeting). See Laporan Ketua Pansus 2003).

17 Interview with Indra Munaswar, 3 October 2003.

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18 For example, the term pemborongan pekerjaan contracting work) employed in the bill was ambiguousand outdated.

19 Unionists were shocked when they heard the news that ILO supported the promulgation of theManpower Law on the basis that the legislationmaking procedure was good because it had intensivelyinvolved the Parliament, government, employers and workers and even further was proposing to helpthe socialisation process through various trainings and publications. Suara Pembaruan, 25 March 2003).It is obvious that this statement is based on the premise that unions participation in the drafting processlegitimised its existence, which reinforced the discourse of unions role in legal politics. Kolben 2002)asserts that many articles of the Manpower bill are in conflict with the ILO Conventions.

20 The Manpower Law replaced 15 previous regulations, such as Law No.12/1948 and Law No.23/1948,which are considered to be amongst the most protective regulations in Asia.

21 Article 137 of the Manpower Law states that strikes shall be staged legally, orderly and peacefully asa result of failed negotiations. It implies that a union can only exercise its right to strike on the basis ofproblems experienced when bargaining with the employer that concern occupational issues. This is incontrary with ILO Convention No.87, and the Decisions of ILO Committee on Freedom of Associationand ILO Committee of Experts that acknowledge the right to strike should not be limited solely toindustrial disputes that are likely to be resolved through the signing of a collective agreement; workers

and their organisations should be able to express in a broader context; if necessary, their dissatisfactionon regards economic and social matters affecting their members interests.

22 Under Article 120 of the Manpower Law, a union must represent at least 50 per cent of the totalworkers in a company in order to be able to access the right to bargain. The earlier law LawNo.21/1954) opened up the possibility that small unions could bargain with the employerindependently of large unions. This right was curtailed from 1985 under Ministerial Regulation No.Per01/Men/1985 on the Implementation Procedures in the Making of Collective Labour Agreements,which ruled that the right of bargaining could only be accessed by a single union whose membershipconstituted at least 50 per cent of the total workers in a company. This regulation, rather than LawNo.21/1954, appears to have informed Manpower Law No.13/2003.

23 Within the policy of exportoriented industry EOI) strategy pursued by the New Order regime for itsbelief of economic development, outsourcing was earlier considered only as part of business practices in

exportimport industries, and thus had been regulated by the Minister of Trade. Law No.13/2003 madeit legal for any industry to outsource noncore functions.

24 Earlier Jacob Nuwa Wea expressed the intention to finish the discussion of the bill as soon as possibleso that by the end of April 2003 it could be handed over to the DPR and promulgated Kompas, 15March 2003). However, the APINDO resisted and insisted that there was no need to speed up theprocess Kompas, 02 June 2003).

25 Interview with Firman Hadi, 25 September 2003; interview with Sobirin, 27 October 2003.

26 Interview with Indra Munaswar, 3 October 2003.

27 Interview with Sebastian Salang, 22 August 2003; interview with Indra Munaswar, 3 October 2003.

28 Interview with Firman Hadi, 25 September 2003. Indra Munaswar said that he and some members ofthe Tim Kecil questioned the inclusion of interunion dispute as part of the jurisdiction of the Court,and had fought to expel it but with no success Interview with Indra Munaswar, 3 October 2003).According to Mizuno, a member of Tim Kecil from PPMI claimed that the introduction of putusan sela interlocutory judgment, tussen voniss) to obligate employer paying the workers wages during disputeprocess as regulated in article 96), and the discharge of execution fees for cases with claim under 150million rupiah as regulated in article 58), were part of the results of Tim Kecils participation personalcommunication with Kosuke Mizuno).

29 Under the old labour dispute settlement system as set out in Law No.22/1957, workers were requiredto be represented by a union before the P4D/P in interest disputes, as unions are assumed would fightfor workers collective interests, whilst for the case of rights disputes, union representation was notdeemed necessary as assumed that the P4D/P would not favour the party who violated the law.

30Pengadilan Negeri is the lowest court in Indonesian court system. It functions as a court in the firstinstance and runs under the jurisdiction of Pengadilan Tinggi High Court) and later supervised under

theMahkamah Agung Supreme Court).

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31 Dannin explains that the campaign and mythmaking activities include repetition to gain publicacceptance for a particular designed world view despite the fact that the world view advocated wasbased on demonstrable inaccuracies and making stories designed to demonstrate the horrors of the oldsystem. The myths are intended to show that contract and the market promote the ideal workplace,that unions are inimical to employee needs and desires, that traditional labor law promotes conflict and

inefficiency, and that opponents of change are misguided, at best, or actually malign.32 Interview with Ari Sunarijati, 26 September 2003; Interview with Indra Munaswar, 3 August 2003.

33 Some important regulations of the Sudomo period made by the National Tripartite Body includeMinisterial Regulation No.Per01/Men/1985 on Implementation Procedures in the making of CollectiveLabour Agreements; Ministerial Regulation No.Per04/Men/1986 on the Termination of Employmentand Severance Payment; Ministerial Decision No.Kep328/Men/1986 on Bipartite Bodies at theCompany Level; Ministerial Regulation No.Per05/Men/87 on Registration of Labour Unions. Theseregulations were controversial as they hindered the development of independent genuine unionism.

34 In 2005 the government decided to revise 41 provisions of the Manpower Law. In the proposedrevision of article 90, employers are no longer obligated to pay the basic minimum wage for parttimeworkers so they could receive wage that was lower than the basic minimum wage. The revised versionof article 66 no longer states the conditions of outsourcing, implying that core business may also be

outsourced. The proposed revision of article 164 would allow employers to sack their workers based onthe reason of force majeure with no explanation of its definition and criteria) with possibility of noseverance pay at all. Unions rejected the planned revision because it gave less protection than theManpower Law. Demonstrations in 2005, culminating with the May Day demonstrations of 2006 forcedthe government to drop the plan. This episode suggests the government still needed unionsparticipation.

35 Before the promulgation of Manpower Law, defacto flexibilisation had already been occurring due tothe problem of low lawenforcement. Since its promulgation, however, local unions have found it moredifficult to organise workers in socalled atypical employment. Local unionists have reported thatcompanies they work for are gradually replacing their union members, who are permanent employees,with a less protected contract workers Kompas, 30 May 2005). Workers are also becoming morereluctant to risk being fired and lose their jobs during this period of high unemployment.

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