Lmd

Labour and management in development

JOURNAL
Volume 9

LABOUR, POLITICS AND THE LAW: A LEGAL-POLITICAL ANALYSIS OF INDONESIAS LABOUR LAW REFORM PROGRAM

Jafar Suryomenggolo Kyoto University

www.labour-management.utas.edu.au

University of Tasmania

2008

LABOUR, POLITICS AND THE LAW: A LEGAL-POLITICAL ANALYSIS OF INDONESIAS LABOUR LAW REFORM PROGRAM1 Jafar Suryomenggolo Kyoto University
Like many other late-developing countries, which have undergone a transition from authoritarianism to democracy, Indonesia has experienced fundamental changes in its economic and political system since the collapse of New Order regime in 1998. Under the neo-liberal agenda of transplanting the regulatory state (Robison et al. 2002), successive Indonesian governments had implemented reforms designed to liberalise the market and to limit the states strategic intervention, while at the same time setting up democratic institutions and improving the independence of judiciary system under the rubric of good governance. Part of that transformation involves changes in labour law, known as the labour law reform program, under which Indonesian industrial relations has been restructured through a series of new labour laws which grant workers universal labour rights whilst introducing labour market flexibility. Against the background of the absence of input from organised labour during the early transition period (Hadiz 1998; Aspinall 1999), and the premise that the labour movements eagerness for democracy largely stems from its material interest in obtaining state support for its organisational viability, vitality and clout (Bellin 2000), it is useful to observe how organised labour had perceived this reform package, which directly affects their members well-being. Drawing on examples from Latin America, Cook (1998) shows that labour law reform tends to occur in two rounds. In the first, democratic round, labour law (re) institutes democratic measures which provide workers of labour rights, whilst during the second round, a greater degree 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. The democratic round started soon after the fall of Suharto when Habibie ratified International Labour Organisation (ILO) Convention No.87 on 5 June 1998 through an executive decision in the form of a Presidential Decree2 and later, signed a technical assistance agreement with the ILO immediately after the visit of ILO Direct Contact Mission in August 1998. Between June 1998 and May 2000 the government ratified five fundamental ILO Conventions. As Caraway (2004) explains this phenomenon demonstrated how international pressure played an important part during this round because the government wished to establish the regimes democratic, labour-friendly image internationally. It also provided, at least formally, a legal base for workers to exercise their rights to organise and bargain collectively, giving them a democratic guarantee of collective power. The second round began with the drafting of three labour 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 and outsourcing employment practices which the government believed could solve the problem of growing unemployment rate, and in case of the Industrial Disputes Settlement bill, which individualised labour dispute through the newly established labour court in order to reduce state intervention. Caraway (2004) uses this formulation to explain why Indonesian unions could preserve protective regulations from the previous regime despite being too weak to resist labour flexibility, arguing that new regulations continue to protect labours collective rights and help shield unions from further flexibilisation, arguing that, contrary to the race to the bottom thesis, that during the reform process Indonesian unions succeeded in upholding pro-labour provisions and ensuring the Indonesian labour market remains rigid, something that has not occurred in other countries. However, Caraways argument assumes the new regulations

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carry the same protective characteristics as the previous regimes and overlooks the impact of reform on the space available for the development of independent unionism. This article takes a fresh look at how Indonesian labour unions have articulated and defended their interests 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 the framework of the transition to democracy, and then describes how unions responded towards the new labour laws. For the first time in over three decades, unions became an integral part of the labour law reform process, and their involvement established them as a crucial actor in the new industrial relations system. However, during the democratisation round, unions received little information about the process of labour law reform, with the exception of Indonesian Prosperous Trade Union, Serikat Buruh Sejahtera Indonesia (SBSI), which was involved in the drafting of the Trade Union Law. Even during the flexibilisation round that followed, unions were poorly informed about the law reform process and were given little opportunity for consultation. This prompted demonstrations, and later, the incorporation of some union leaders 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 true that Indonesian unions benefited from international pressure during the democratic round, and later defended their position based on the legacy of pro-labour regulations from previous regimes in the flexibilisation round, a closer investigation on the unions responses toward the reform process indicates that they were could not be considered favourable for the unions in a long run. As expected, unions responses lent symbolic acceptance to the law within the legal-political sphere. However, at the same time their lack of political power meant that they failed to fully articulate and promote their interests within the law reform process, leading to the passing of laws that have ultimately imposed greater constraints on their future responses and strategies. SPSIs Involvement The opportunity to establish genuine trade unions outside the government-sponsored union All Indonesia Workers Union, (Serikat Pekerja Seluruh Indonesia) after the fall of Suharto provided momentum for workers to establish their independence from the state repression and patronage. Upon the ratification of ILO Convention No. 87, the number of unions listed with the Department of Manpower mushroomed from one in 1997 to 30 federations in 2000 and 86 federations by 2005. Most of the unions formed during at that early period were based on groups of company unions in the same area/region, and generated by the help of Non Governmental Organisation (NGO) activists (see Ford 2000). In general, unionised workers saw the ratification as providing a legal instrument to protect them in excising their right to organise,4 and had some expectation that the government would follow the path of democratic rule. But when the government moved forward with the Trade 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 association promised under the loosely-defined ILO Convention No.87. However, the government pressed on with the bill, and by 4 August 2000 it had entered into law. The Trade Union Law grants a number of protective measures for unionism. It acknowledges the right of workers to establish unions and become members of the union of their own choice, as stated in the ILO Convention. It also obligates employers to allow union officials and members leave from their work obligations, in case as to perform union activities (Article 29). Moreover, as prescribed in Articles 28 and 43, it prohibits employers to obstruct union activities, by means of dismissal, suspension, reduction of wages, intimidation and campaign against the formation of a union, and also contains a criminal penalty of up to five years imprisonment and/or 500 million Rupiah fine for such violations. The promulgation of this law made employers aware of their obligations and portrayed the government as pro-labour.5

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

However, unions feared that the government would use the provisions of the law to control them. Unions concerns over its content were not without reason since article 38 of the law allows the court to dissolve a union whose ideology is in breach of the 1945 Constitution or Pancasila, 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 only union involved in the drafting process.6 Although many observers are cynical about SBSIs involvement, at that time, of the 30 newly registered unions only SBSI had a firmly established organisational structure. Formed in 1992, SBSI had a strong plant level union membership and had developed lobbying skills, as well as access to significant international support and financial resources. These characteristics made SBSI different from other unions, which were still struggling to establish themselves, in that, unlike its less-developed counterparts, SBSI had the organisational capacity to engage itself in the formal political arena. However, SBSIs involvement during the drafting of the Trade Union bill was only made possible by a formal invitation from the government (which at the same time had asked ILO for 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. After releasing SBSIs chairperson Muchtar Pakpahan from jail, the government felt that it was necessary to involve him during the drafting process in order to gain the trust of the international community. It should be noted that SBSI was the first social movement organisation to get an invitation not only to attend, but also present opinions in, a parliamentary session. During the New Order regime no social movement organisation could attend parliament, let alone obtain an opportunity for a public hearing. The new government recognised that international support for SBSI meant that SBSIs organisational involvement in the process could boost governments credentials concerning its commitment for labour rights. Although other unions and some NGOs obtained invitations to the same public hearing at a later stage, SBSI was singled out as being capable enough to be drawn into, and engage 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 the Suharto period.8 Unions arranged rallies and demonstrations based on their rejection of the 1997 Labour Law, but not on the Trade Union bill. Unions considered the implementation of the Labour Law to be more threatening because they believed the government would give it priority over the Trade Union bill, since it had been postponed twice since its promulgation in 1997. They hoped a union victory over the Labour Law would encourage the government to abandon the Trade Union bill, while some national unions argued that the government should have had annulled the Labour Law first before proceeding on the promulgation of Trade 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 Trade Union Law was promulgated. Union Mass Opposition The promulgation of the Trade Union Law signaled the end of the democratic round of the labour law reform and the beginning of the flexibilisation round, with two bills (the Manpower 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 the drafting process of those two bills since rumours were circulating that the bills would be promulgated by the end of September 2000 (Kompas 13 September 2000). Their proactive stance was markedly different from their attitude during the processing of the Trade Union bill, when they relied only on an invitation from the Parliament to engage in the parliamentary process. The national unions involved in the KAPB were aware of the fact that the discussion of Trade 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 parliament had 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 Jakartabased 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 their opinions (Kompas 13 September 2000). They also expressed concern on the substances of the bills, 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 of workers rights, especially the right to strike and dismissal procedures, and the lack of union participation during the parliamentary process, whilst the discourse of flexibility remained unmentioned. Their continued focus on maintaining the rights they had gained through the democratisation round of the reform meant that unions failed to recognise the role the Manpower bill was intended contribute to the construction of a flexible labour regime, in line with the governments market-oriented policy to create more jobs. In addition to inter-union discussions, unions affiliated to KAPB and SBSI produced counter 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. Although these counter draft bills differed in form and content, they all emphasised restrictions on dismissal procedures.10 As the discussion among union organisers became more and more intense, the process in parliament seemed to stall. Until June 2002, there was no news about whether the two bills were to be promulgated or not. Many unionists had stopped talking about the bills, although the issue was not completely abandoned.11 Some minor demands for 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 it intended 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 the Parliament building (Kompas 13 September 2002). By 23 September 2002 those unions engaged 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 1974 Marriage Law that a social group had forced the parliament to postpone the promulgation of a law. At that point, the unions had realised the effectiveness of consolidated action in defending their collective interests.12 On the other hand, that collective action alarmed both the government and employers about unions potential strength. It changed their perception that unions were no longer a minor actor, as they were under the New Orders Pancasila Industrial Relations system (see Ford 1999), but had become a serious threat that may upset the balance of harmonious industrial relations and harm the investment climate. Unions were taken 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 obtain their support. Incorporating the Unions: The Tim Kecil 13 The 23 September demonstration in Jakarta triggered waves of opposition in other cities. In Semarang, Central Java, militant union activists formed a coalition to oppose the enactment of both bills (Bernas 25 September 2002), while some local unions affiliated to KAPB in Sidoardjo, East Java, successfully pressed the local parliament, Dewan Perwakilan Rakyat Daerah (RDPU), to sign an agreement to reject the Manpower bill (Kompas 26 September 2002). This was the first time since 1998 that unions succeeded in coordinating massive demonstration on the same issue in a number of cities. Facing this widespread negative response from the unions, 14 the Parliament realised it could not 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 special parliamentary team (Pansus, Panitia Khusus), moved to facilitate an informal meeting with

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

unions and employer association to find solutions concerning the Manpower bill (Kompas 2 October 2002). In that meeting he was accompanied with Herman Rekso Ageng, another member of the Indonesian Democratic Struggle Party, Partai Demokrasi Indonesia Perjuangan (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 General Chairperson of SPSI), some union leaders were invited to subsequent informal meetings on November 7 and by November 12. This group later became known as the Tim Kecil (see Table 1).15 Union leaders disagreed on the benefits of this Tim Kecil would bring for the labour 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 it as an opportunity to later influence the parliament the same way as SBSI did in the Trade Union bill. Thus in this flexibilisation round, with the creation of Tim Kecil, union leaders were split, those who were members of the Tim Kecil on one side, and those who continued to be excluded from the negotiating table on the other. Table 1. Members of Tim Kecil for the Manpower Bill Name Ari Sunarijati Union Director of the Bureau of Women and Children, Federation of All Indonesian Workers Union Reformasi (FSPSI-Reformasi, Federasi Serikat Pekerja Seluruh Indonesia Reformasi ) Chairperson of the Federation of Agriculture and Plantation Workers Union (FSPPP- KSPSI, Federasi Serikat Pekerja Pertanian dan Perkebunan) Chairperson on Advocacy of the Federation of Chemical, Energy and Mining Workers Unions (FSPKEP-KSPSI, Federasi Serikat Pekerja Kimia, Energi dan Pertambangan) General Secretary of the Federation of Textile, Clothing and Footwear Workers Union Reformasi (FSPTSK Reformasi, Federasi Serikat Pekerja Tekstil, Sandang dan Kulit) Vice Chairperson of the Forestry, Wood and Agriculture Union, Indonesian Prosperous Trade Union (SBSI, Serikat Buruh Sejahtera Indonesia) General Chairperson of the Indonesian Union of Maritime Workers and Fishermen (SBMNI, Serikat Buruh Maritim dan Nelayan Indonesia) General Secretary of the Federation of All Indonesian Workers Union Reformasi (FSPSI Reformasi, Federasi Serikat Pekerja Seluruh Indonesia Reformasi) Chairperson of the Indonesian Prosperous Trade Union, (SBSI, Serikat Buruh Sejahtera Indonesia) General Secretary of the Federation of the Indonesian Metal Workers Union (FSPMI, Federasi Serikat Pekerja Metal Indonesia) General Secretary of Independent Workers Union (PBI, Perserikatan Buruh Independen)

Arief Soedjito

Chaerul Bey

Indra Munaswar

Kusharyanto

Martin Sirait

Muhammad Rodja

Rekson Silaban

Said Iqbal

Sebastian Salang

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After the two initial meetings, and upon receiving a formal parliamentary mandate as he called it signed by Surya Chandra Surapaty and Jacob Nuwa Wea, Herman Rekso Ageng arranged and facilitated eight subsequent meetings in NovemberDecember 2002 and January 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 issues were on the agenda because they were main points on which the unions had opposed the Manpower bill, while the latter two were added in the process of the meetings when it was realised that those issues were not specifically regulated.18 The term outsourcing was thus first discussed amongst the members of Tim Kecil and later included into the first version of the agreed draft (naskah kesepahaman) of the bill. The selection of these four issues clearly indicated that the government felt a need to gain labours consent for the formal introduction of the idea of flexibility. By 3 January 2003, the final version of the agreed draft was presented to the parliament as an agreement on particular articles between unions and employers under the guidance of Herman Rekso. Although the unions in the KAPB declared their opposition to 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 25 March as the Manpower Law No.13/2003.19 As Caraway (2004) notes, the Manpower Law preserves many of the parameters from the previous regulations for individual workers such as prohibitions of discrimination in employment practices and the basic forty-hour work in a week. However, it also brought some significant setbacks regarding workers collective rights. 20 Although the law acknowledges the workers right to stage strike as a fundamental, it allows the legal use of strike-breakers and provides no room for the occurrence of secondary strikes, which were permitted under the previous law.21 In addition it only grants the arrangements of collective labour agreements (Perjanjian Kerja Bersama) to the dominant union in a workplace, thus making it impossible for other small unions to have a bargaining with their employer, as previously 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 in any industry, whereas previously it was allowed only in certain areas and of particularly in export-oriented garment factories with stricter rules and conditions.23 Thus, the law poses potential 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. He waited until after the 2003 May Day celebration, which as expected was dominated by protests against the new Manpower Law. 24 He then moved quickly on the Industrial Dispute Settlement bill, arranging the first informal meeting on 31 May while unions were still preoccupied with the Manpower Law. Registered national unions were sent formal invitations to attend for the meeting but not all attended. Those who came were divided into four 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, FSPSI Reformasi and, lastly, SBSI and other unions.25 Afraid of facing further accusations of not being 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 Abdul Hakim Union General Secretary of the Brotherhood of Indonesian Muslim Workers (PPMI, Persaudaran Pekerja Muslim Indonesia)

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

Abdul Salam Daude

Chairperson of the Federation of Indonesian Industrial Workers Union (Gasbiindo, Gabungan Serikat Buruh Industri Indonesia) General Secretary of the Federation of Cigarette, Tobacco, Food and Drink Workers Union (FSPRTMM-KSPSI, Federasi Serikat Pekerja Rokok,Tembakau, Makanan dan Minuman) General Chairperson of the Federation of All Indonesian Teachers Union (FSPKSI-KSPSI, Federasi Serikat Pekerja Kependidikan Seluruh Indonesia) Research Division of the Federation of All Indonesian Workers Union Reformasi (FSPSI Reformasi, Federasi Serikat Pekerja Seluruh Indonesia Reformasi) Officer of the Federation of Construction and Public Works Workers Union, (FSPBPU-KSPSI, Federasi Serikat Pekerja Bangunan dan Pekerjaan Umum) Vice Chairperson of the Federation of Indonesian Metal Workers Unions (FSPMI Federasi Serikat Pekerja Metal Indonesia) General Chairperson of the New Federation of Independent Workers Union (Gaspermindo Baru, Gabungan Serikat Pekerja Mandiri Indonesia Baru) Chairperson of the Federation of Textile, Clothing and Footwear Workers Union (FSPTSK-KSPSI, Federasi Serikat Pekerja Tekstil, Sandang dan Kulit) General Chairperson of the Indonesian Peoples Labour Union (SPRI, Serikat Pekerja Rakyat Indonesia) General Secretary of the Independent Workers Union (PBI, Perserikatan Buruh Independen) Chairperson of the Federation of Tourism Workers Union (FSPPKSPSI, Federasi Serikat Pekerja Pariwisata)

Buyung Marizal

Firman Hadi

Franky Tan

Lainsamputty Fritz

Makmur Komaruddin

Miyadi Suryadi

Nurdin Singadimedja

Ruslan Effendy

Sebastian Salang

Shamiri Sandja

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 this group 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 this group was, or because they were prepared to take whatever role was set by in order to remain involved the process. It seemed that the involvement of these Resource Persons could 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 Arief Soedjito Indra Munaswar Kusharyanto Said Iqbal Union Chairperson, FSPPP-KSPSI General Secretary, FSPTSK Reformasi Member of the Organisational Consultative Council (Majelis Pertimbangan Organisasi), KSBSI General Secretary FSPMI

After formulating a sketchy draft bill in a three-day discussion in July with three labour law professors, Herman Rekso began to arrange informal meetings in August with the Tim Kecil and the resource persons. The three professors rather than members of the Tim Kecil dominated the debate because much of the discussion focused on legal technicalities. 27 As a result, the process was much shorter, and an agreed draft was produced within only two months. By November it was handed over to the Parliament house for an approval in the General Meeting of the parliamentary assembly. The Tim Kecils involvement was not totally ineffective. According to Firman Hadi, a member of Tim Kecil, their participation during the meetings led to the inclusion of some favourable provisions for the final draft of the Industrial Dispute Settlement bill, such as the idea that the new system would be free of any charge for labour and that unions, not only lawyers, can have a legal standing before the court to represent their members. 28 This was indeed a crucial achievement that could only be gained with unions participation inside the process. The Industrial Dispute Settlement Law established a new system of formal judiciary courts, known as Industrial Dispute Courts, Pengadilan Perselisihan Hubungan Industrial (PPHI), to settle all labour disputes regardless of the nature of the disputes origins. By abolishing the existing Labour Dispute Settlement Committees (P4D/P, Panitia Penyelesaian Perselisihan Perburuhan), the law blocked the possibility for continued active state intervention in labour cases, since the role of government is now limited only as a mediator based on the request of disputing parties. It also promoted the individualisation of labour relations by granting access for any individual workers to bring any cases they may have to the court without having to be represented by a trade union.29 This undermined unions ability to defend the collective 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, the Industrial 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, which position individual workers as common laymen. In practice, this has forced most workers to seek legal expertise, which many unions are still lacking. Therefore although individual workers may hypothetically use the court system, it is difficult to see how an individual worker could win in defending his/her interests alone before the Industrial Dispute Court without being backed up by unions organisational power. Unions in Legal Politics By 2005 the labour law reform program had resulted in the ratification of five ILO conventions and the production of three new labour laws. As the discussion above shows, national-level unions demonstrated different attitudes towards the regulations itself and reacted differently towards the process through which those regulations were produced in the democratic round and the subsequent flexibilisation round. The union movement generally found the regulations enacted during this democratic round acceptable with the exception of some parts of the Trade Union bill because they saw them as reinstating union

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

rights. Indeed, the ratification of ILO conventions was welcomed, and was used strategically by many unionised workers to legalise and register their newly formed organisations. However, the union movement did not actively seek to influence the legal policy-making process 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 an international image as a labour-friendly regime. In contrast, unions actively engaged in legal politics during the flexibilisation round because they saw the Manpower and Industrial Dispute Settlement bills as potentially leading to an erosion of their rights, and thus as an attack on them. Unions began by taking a defensive stand, but became more vocal over the course of time, ultimately mobilising mass opposition, in contrast with during the democratisation round when there was no significant collective unrest in showing unions rejection against the drafting of Trade Union bill. This move had succeeded in drawing the attention of the parliament. The shift in unions response during the flexibilisation round clearly illustrates the dynamic interaction between labour and 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 unions position. Other country studies suggest that what happened to Indonesian unions during the labour law reform process is not unique. Unions everywhere have difficulty responding promptly to labour law reform as it comes from government not unions, and generally seeks to liberalise the labour market in order to boost the countrys competitive advantage under globalisation. For example, the Korean Confederation of Trade Union (KCTU), the independent union in South Korea, faced a difficult situation when considering whether or not to participate when the 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 the rank-and-file members for accepting a layoff clause (Koo 2001). Likewise, New Zealand unions 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 the process, the government succeeded in convincing them that the reform was needed to promote economy recovery (Dannin 2001). As Dannin shows, this was achieved through a series of public relations campaigns, opinion polls, and also mythmaking before the reform process began.31 Ultimately, the unions could not oppose the neo-liberal reform agenda even though the rank-and-file expected their leaders to oppose it. These studies show there is a mixture of positions on union involvement. Some condemn unions participation because they see it as co-optation, while others consider that unions should get involved and work within the process to deliver change. This was also the case in Indonesia during the labour reform process. As noted above, KAPB had refused to accept the Tim Kecils legitimacy as a representative of unions in general, rejecting the agreed draft (naskah kesepahaman) on these grounds. Further, KAPB considered that the involvement of Tim Kecil demonstrated that its members become integrated into the reform process and implicitly supported the governments economic policy agenda, even where it had anti-union implications for labour policy. Tim Kecil participation was evaluated on the results of its deliberations, which included some erosion of Indonesias protective labour regulations. Meanwhile members of the Tim Kecil insisted that they were defending workers interests. They reasoned that their participation was necessary because unions had to learn to deal and fight for their interests on negotiation table in Indonesias new democracy. They pointed out that their participation brought a better result for workers protection in terms of maintaining protective regulations concerning women workers and also by regulating and limiting the excess of contract work.32 Regardless of its outcomes, it is clearly important that unions were invited to participate in the 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 since SPSI, the sole labour union, was not an independent player within the Pancasila industrial relations. 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) notes that in the early and mid 1980s the then Minister of Manpower Sudomo used to dispelled foreign criticism of his policies as Minister of Manpower by citing that they were the products made through consultations and cooperation with union in the formal discussions of this tripartite body.33 But the reform program opened up opportunities for the newly established labour unions to prove themselves as independent actors free from state patronage, and thus worthy of involvement in the process of shaping a new industrial relations system. This process started during the democratisation round with SBSIs ceremonial involvement in drafting the law and then deepened during the flexibilisation round as labour unions were increasingly acknowledged as an actor and expected to take a role in the reform process. Labour Law or Politics? The transitional period indeed gave Indonesian unions more freedom. The political transformation since 1998 have granted workers legal guarantee to organise and form unions and to collectively defend their members interests. More than that, it offered them a new arena for participation and gave them a role within the legal-political system. Labour unions were the first social group that demanded to be involved in the drafting of Indonesias legal framework. It then permitted labour unions to participate in the drafting process to protect their rights and freedoms, and also where possible, to work within the system, by defining democratic provisions as in the case of Trade Union Law. The transition period has secured for 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 the labour law reform and their participation within the drafting process was in fact largely determined by the space accorded to them by the government. The form that unions participation took stemmed from the governments invention first in order to gain international recognition, in case of SBSIs involvement, and later to channel unions opposition, in case of the Tim Kecil. During the democratic round, the government needed to build a different image from the oppression of workers under the New Order period, and so allowed SBSI to be involved. During the flexibilisation round, the initial impetus of creating the Tim Kecil initiative may have been grounded on the fear of collective labour militancy as had shown in the demonstrations of September 2002 if, as Ford (2004) argues, fear of collective labour militancy could be traced back to the business communitys concern about the 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, unions role in the legal-political arena was defined not as policy-makers but as a means to improve the governments international image during the democratisation round, and to ensure that the drafting process was accomplished without further disruptions during the flexibilisation round. The flexibilisation round of labour law reform shows how juridification of labour laws steered the unions into a binding legal framework, securing continuous control over them, as well as their adaptation to the governments economic policy (Simitis 1987). From the creation of Tim Kecil, it is evident that the legislators had tried to institutionalise the presence of labour unions in the hope that they would be able to ensure unions consent asserting that unions had been participating during the whole process. On the other hand, unionists willingness 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 unions understanding of, and expectations from, labour legislation. Unionists tend to take it for

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

11

granted that labour law reform would be in the interests of their members, and that the government 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, they exaggerate 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 the governments labour law reform program.34 As it was evident during the reform process, it occurred because unions focused so much of their efforts on the technicalities of formal law and governmental regulations, in the process overlooking the initial reasons of governments willingness to allow them to participate the drafting process. Even if unions present a united front when entering the parliament, formal politics is not a neutral arena where unions can easily promote their interests. The fragmentation of Indonesian labour movement may put constraints and deliver problems in fostering their interests, but the present general political conditions pose much greater obstacles. During the 1950s, organised labour in Indonesia were also fragmented, as Tedjasukmana (1958:25) notes that there were as many as 150 national unions and several hundreds of local unions not affiliated 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. In that period, Indonesian labour indeed enjoyed a greater degree of organisational freedom and legal protections under the political system of a constitutional democratic regime (see Feith 1962). In contrast, in this transition period, Indonesian politics is dominated by the predatory power 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 to capture and seize any opportunity from the labour movement in order to secure their political power, and that the transition period has placed particularly strong political and economic constrains on the working class. These factors have prevented unions from accessing enough political space during the transition period unions to ensure their independent participation in Indonesias new democracy. Unions ability to respond differently during the labour law reform process was also limited by their institutional capacity. The reform program began precisely as workers obtained the freedom to form unions and many of the unions were still in the very earliest stages of organising, and had yet to develop strategies for effectively articulating and defending their interests. Instead of being able to take time to consolidate, they were thrust into a situation where they had to respond to the labour reform program, which itself created further obstacles for unions with regard to the labour market. In short, unions have had to confront the challenges of labour law reform at a time when they are poorly positioned in political arena and currently overwhelmed by the rapid changes their member-workers have to face due to increasing flexibility in the workplace.35 In such a situation, the only way forward is for unions to build themselves based on active membership and internal consolidation rather than seeking political support from the state. Conclusion This article has described the fundamental transformation, which had taken place in Indonesian industrial relations since 1998 as a result of the labour law reform program. In the process of establishing a set of labour laws defining a new industrial relations system, the reform 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 in the democratic and flexibilisation rounds of the reform process. The unions welcomed the democratic round because it involved the enactment of labour regulations supporting labour rights. During the flexibilisation round, unions initially responded negatively since the labour regulations produced were perceived to damage unions ability to organise, only to be incorporated within the special mechanism of the Tim Kecil, designed to channel and accommodate that response. The article has shown that those unions responses of involvement, opposition and incorporation, forced the government to recognise them as a crucial actor in industrial

12

Jafar Suryomenggolo

relations and as a stakeholder in the formation of the new system. The transition period opened up new opportunities for Indonesian labour unions, as they were included in the drafting process. However, although the reform process succeeded in enacting a new set of labour laws, it failed to generate meaningful public involvement, either from the labour unions or from society in general. And once established those laws created structural obstacles that make it more difficult for independent unions to develop their strategies and organisational skills, and thus limited the possibility that they can better represent workers in the future. REFERENCES
Amiruddin 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 of Indonesian and Malaysian Affairs, 33(2):131. Bellin, E., 2000. Contingent Democrats: Industrialists, Labour, and Democratization in Late-Developing Countries, World Politics, 52(1):175205. Caraway, T., 2004. Protective Repression, International Pressure, and Institutional Design: Explaining Labour Reform in Indonesia, Studies in Comparative International Development, 39(3):2849. Cook, M.L., 1989. Toward Flexible Industrial Relations? Neo-Liberalism, Democracy, and Labour Reform in Latin America, Industrial Relations, 37(3):311336. Dannin, E., 2001. Hail, Market, Full of Grace: Buying and Selling Labour Law Reform, Law Review of Michigan 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 for International 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 Age of 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 Gunther Teubner. Berlin/New York: Walter de Gruyter: 113162. Suryomenggolo, J., 2004. Dinamika Perumusan Undang Undang Ketenagakerjaan dan Rancangan Undang 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, Monograph series, Modern Indonesia Project, Cornell University, Ithaca. Notes Thanks to Michele Ford for her sensitive reading, and to Mizuno Kosuke, Luke Arnold and the journals anonymous referees for their critical comments on the initial draft. Any errors are, of course, my own.
1 2 Executive decisions occur outside parliamentary channels. The 1945 Constitution states that ratification of any international conventions and agreements should be made through consultation with

and endorsed by the Parliament in a formal parliamentary session and be legalised under the form of an Law.
3 Those three labour bills were the Trade Union bill Rancangan Undang Undang tentang Serikat Pekerja/Serikat Buruh, RUU SP/SB), the Manpower bill -Rancangan Undang Undang tentang Pembinaan dan Pengawasan Ketenagakerjaan, RUU PPK), and the Industrial Dispute Settlement bill -Rancangan Undang Undang tentang Penyelesaian Perselisihan Hubungan Industrial, RUU PPHI), which became known as the Package of three labour bills. Several versions of those bills came with various titles with slightly differences, and over the course of time, those titles were revised in accordance with the Parliaments discussion process. 4 Some labour cases handled by the Legal Aid Institute -LBH, Lembaga Bantuan Hukum) were based on the argument that the government had ratified ILO Convention No.87 and thus must guarantee the implementation of its principles by permitting workers to organise. 5

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

SBSI even claimed that some articles of the Law came from their recommendations Kompas, 20 July 2000). SBSI could also obtain inside information from Parliament since one of its cofounder, Jacobus Majong, was a Member of Parliament. For more details on the controversy around Labour Law No.25/1997, see Amiruddin and Teten Masduki 1997). 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 Prosperous Trade Union), Gabungan Serikat Buruh Mandiri GSBM, Federation of Independent Unions), Federasi Serikat Buruh Paguyuban Karya Utama FSBPKU, Federation of Karya Utama Unions), Federasi Serikat Pekerja Metal Indonesia FSPMI, Federation of Indonesian Metal Workers Unions), Front Nasional Perjuangan Buruh Indonesia FNPBI, National Front of Indonesian Workers Struggle).

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 unions uprising organizing power and the shift of employers move to constitute Apindo as an effective organization rather than relying on the government, as was the case during the Suharto years, while Ford 2004) points out how this controversy gave rise to concerns from foreign investors over union militancy.
11 12

Interview with Timboel Siregar, 29 August 2003.

13 The description of the formation and meetings of Tim Kecil presented here is based on Suryomenggolo 2004). 14 APINDO also rejected the bill, which it considered was prolabour. APINDO indicated that it would prefer to have bipartite negotiations with the unions instead of tripartite meetings under the government, to settle this issue Tempo Interaktif, 8 October 2002). However, this massive labour demonstration was the basic concern of the Parliament. 15 The union leaders involved in the Tim Kecil had an extremely diverse profile. Structurally, they were all highranking union officials, but they had very different backgrounds. Many of them had long standing 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 political processes, while others sought political sponsorship by the state. This diversity in background and interest 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 not come from the parliamentary budget, but rather was drawn from his own pocket. Although conducted outside 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.

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

Unionists were shocked when they heard the news that ILO supported the promulgation of the Manpower Law on the basis that the legislationmaking procedure was good because it had intensively involved the Parliament, government, employers and workers and even further was proposing to help the 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 process legitimised 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.
19 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 as a result of failed negotiations. It implies that a union can only exercise its right to strike on the basis of problems experienced when bargaining with the employer that concern occupational issues. This is in contrary with ILO Convention No.87, and the Decisions of ILO Committee on Freedom of Association and ILO Committee of Experts that acknowledge the right to strike should not be limited solely to industrial 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 dissatisfaction on 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 total workers in a company in order to be able to access the right to bargain. The earlier law Law No.21/1954) opened up the possibility that small unions could bargain with the employer independently of large unions. This right was curtailed from 1985 under Ministerial Regulation No.Per 01/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 membership constituted at least 50 per cent of the total workers in a company. This regulation, rather than Law No.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 its belief 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 made it legal for any industry to outsource noncore functions.

Earlier Jacob Nuwa Wea expressed the intention to finish the discussion of the bill as soon as possible so that by the end of April 2003 it could be handed over to the DPR and promulgated Kompas, 15 March 2003). However, the APINDO resisted and insisted that there was no need to speed up the process Kompas, 02 June 2003).
24 25 26 27

Interview with Firman Hadi, 25 September 2003; interview with Sobirin, 27 October 2003. Interview with Indra Munaswar, 3 October 2003. 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 of the 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 dispute process as regulated in article 96), and the discharge of execution fees for cases with claim under 150 million rupiah as regulated in article 58), were part of the results of Tim Kecils participation personal communication with Kosuke Mizuno). 29

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

30

Pengadilan Negeri is the lowest court in Indonesian court system. It functions as a court in the first instance and runs under the jurisdiction of Pengadilan Tinggi High Court) and later supervised under the Mahkamah Agung Supreme Court).

31

Dannin explains that the campaign and mythmaking activities include repetition to gain public acceptance for a particular designed world view despite the fact that the world view advocated was based on demonstrable inaccuracies and making stories designed to demonstrate the horrors of the old system. 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. Interview with Ari Sunarijati, 26 September 2003; Interview with Indra Munaswar, 3 August 2003.

32 33

Some important regulations of the Sudomo period made by the National Tripartite Body include Ministerial Regulation No.Per01/Men/1985 on Implementation Procedures in the making of Collective Labour Agreements; Ministerial Regulation No.Per04/Men/1986 on the Termination of Employment and Severance Payment; Ministerial Decision No.Kep328/Men/1986 on Bipartite Bodies at the Company Level; Ministerial Regulation No.Per05/Men/87 on Registration of Labour Unions. These regulations 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 proposed revision of article 90, employers are no longer obligated to pay the basic minimum wage for parttime workers so they could receive wage that was lower than the basic minimum wage. The revised version of 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 on the reason of force majeure with no explanation of its definition and criteria) with possibility of no severance pay at all. Unions rejected the planned revision because it gave less protection than the Manpower Law. Demonstrations in 2005, culminating with the May Day demonstrations of 2006 forced the government to drop the plan. This episode suggests the government still needed unions participation.

35 Before the promulgation of Manpower Law, defacto flexibilisation had already been occurring due to the problem of low lawenforcement. Since its promulgation, however, local unions have found it more difficult to organise workers in socalled atypical employment. Local unionists have reported that companies 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 more reluctant to risk being fired and lose their jobs during this period of high unemployment.