Monthly Archives: December 2012

Video

Demonstration Outside Freeport Headquarters in the US

Political scientist Chris Lundry speaks at a demonstration outside Freeport McMoRan headquarters in Arizona. Along with giving a history of Freeport in Indonesia, Lundry discusses the low wages of miners employed in Papua.

PT Kizone Workers Find Solidarity In US Students

Dollars and Sense has this piece on the campaign of PT Kizone workers and the way they have connected with the anti-sweatshop movement on US campuses, including the on-going campaign by students at UW-Madison to push their university to cut its ties with Adidas over the dispute.

Abandoning his financially ailing factory in the Tangerang region of Indonesia, owner Jin Woo Kim fled the country for his home, South Korea, in January 2011 without leaving money to pay his workers. The factory, PT Kizone, stayed open for several months and then closed in financial ruin in April, leaving 2,700 workers with no jobs and owed $3.4 million of legally mandated severance pay.

In countries like Indonesia, with no unemployment insurance, severance pay is what keeps workers and their families from literal starvation. “The important thing is to be able to have rice. Maybe we add some chili pepper, some salt, if we can,” explained ex-Kizone worker, Marlina in a document released by the Worker Rights Consortium (WRC), a U.S.-based labor-rights monitoring group, in May 2012. Marlina, widowed mother of two, worked at PT Kizone for eleven years before the factory closed. She needs the severance payment in order to pay her son’s high school registration fee and monthly tuition, and to make important repairs to her house.

When the owner fled, the legal responsibility for severance payments to PT Kizone workers fell on the companies that sourced from the factory—Adidas, Nike and the Dallas Cowboys. Within a year, both Nike and the Dallas Cowboys made severance payments that they claim are proportional to the size of their orders from the factory, around $1.5 million total. But Adidas has refused to pay any of the $1.8 million still owed to workers.

The precedent of withholding wages and benefits is strong in the garment industry as a whole. Apparel brands rarely own factories. Rather, they contract with independent manufacturers all over the world to produce their wares. When one factory closes for any reason, a brand can simply take its business somewhere else and wash its hands of any responsibilities to the fired workers.

Past campaigns run by United Students Against Sweatshops (USAS) have cost brands like Nike and Russell millions of dollars when university contracts were cut. Campus activism has forced Nike to pay severance and Russell to rehire over 1,000 workers it had laid off, in order to avoid losing more collegiate contracts. Now many of these college activists have their sights set on Adidas. (Read full article here)

Komnas HAM: Police First, Companies Second In Human Rights Complaints

The National Commission on Human Rights (Komnas HAM) released the number of human rights complaints through the first 11 months of this year.  Komnas HAM received a total of 5,422 complaints of alleged human rights abuses, with the largest category of complaints involving the police.  Second, however, was private companies (1,009 complaints), with 276 of these involving employment disputes.

From The Jakarta Post:

This year, the commission also received 1,009 reports on human rights abuses allegedly conducted by companies.

The reports said that the companies were involved in land disputes (399 cases), employment disputes (276 cases) and environmental pollution and damage (72 cases).

“The figures reflect that companies are among the non-governmental actors, besides mass organizations, that have the potential to be human rights offenders,” he added.

Komnas HAM commissioner Natalius Pigai said he was concerned that many companies banned or strategically weakened labor unions to undermine salary rise demands.

Komnas HAM said that the figure of this year’s report was 20.4 percent higher than last year’s 4,502 cases

KADIN: Labor Unions Should Be “Championing” Outsources

Suryo Bambang Sulisto, Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), explains in Jakarta Globe op-ed what he calls labor’s “misperceptions” regarding outsourcing:

Outsourcing is not a new concept. In fact, it is a trendier, more modern term for sub-contracting, which has been part of the business landscape for more than half a century. But listening to the raging debate here at home, especially from labor unions, one would think that outsourcing is a grave threat to workers and the Indonesian economy.

Even senior cabinet ministers have recently spoken out against outsourcing and the government is now mulling new regulations to restrict outsourcing to just a few sectors such as catering, security and cleaning services.

This perception could not be further from the truth. Outsourcing is part and parcel of today’s globalized economy. Rather than seeking to limit it or even kill it, the government and the labor unions should instead be championing outsourcing as another pillar of the Indonesian economy.

Whose Afraid Of A Minimum Wage?

From this Jakarta Globe article on minimum wage increases in Indonesia:

Heriyanto Irawan, an executive at Deutsche Bank, said he believed the minimum wage rises across the country may actually stimulate investment because higher wages lead to more consumption.

“The positive consequences from the wage increase is an increase in consumption,” Heriyanto said in a meeting with reporters on Wednesday in Jakarta.

He said that on average an increase of 5 percent of sales turnover at a company should be enough to absorb the increase in labor costs.

[Update]: Or, from the Financial Times

But in spite of loud complaints from corporates, experts say issues like wage hikes are unlikely to dampen investor enthusiasm for south-east Asia’s largest economy. Indeed, FDI surged 22 per cent year on year to an all-time high of $5.9bn in the third quarter, even as GDP growth slowed slightly from 6.4 per cent to 6.2 per cent.

HSBC said in a report:  [Foreign direct investment] is drawn to Indonesia for reasons beyond cheap labour. Its population of 240mn represents not just a resource, but also a significant market. Rising incomes – helped along by minimum wage hikes – only raises its allure as the latter… As it stands, consumption expenditure has already increasingly been growing at above trend so far this year; the impulse from a larger than usual minimum wage hike next year could fuel an even faster rise.

To a degree, the government has bowed to corporate pressure by introducing an exemption from the minimum wage hike for SMEs and MNCs that cannot afford it (subject to an external audit). But most experts and industry members are bracing for similar measures to be pushed through next year.