Monthly Archives: July 2013

Migrant Households and the Informal Sector

In a new article from the Bulletin of Indonesian Economic StudiesChris Manning and Devanto S. Pratomo looks the labor market outcomes for migrants and non-migrants, particularly if they end up in the informal sectors.  The link to the article is here, but requires access. Here are the findings from the abstract:

We find that long-term migrants (LTMs) tend to gravitate to the small-business sector and to jobs with regular wages, whereas recent and very recent migrants are more likely to work in the informal sector. Our findings on the labour-market outcomes of successive generations of migrants are less conclusive. While a larger proportion of LTM children than that of their parents work in the formal sector, the children of migrant heads of households are less likely than those of non-migrants to find formal-sector jobs. We also find that distortionary labour-market regulations appear to diminish the overall benefits of migration.

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Jakarta’s EPL Party & Indonesia’s Forgotton Domestic Players

A recent column by Anthony Sutton in The Jakarta Globe highlights the unsettling juxtaposition between the celebrated visits to Jakarta by the world’s most famous football clubs and the otherwise rampant dysfunction of the Indonesian football industry. Among other issues in the Indonesian game, there are serious labor issues involving player salaries. From the column:

The clowns were here before the English Premier League traveling circus arrived and will be here long after it is gone. The English clubs’ legacy is YouTube videos of crazy, crazy nights at Jakarta’s Gelora Bung Karno Stadium and that’s about it.

Indonesian players will continue to not get paid. I wonder if the likes of Olivier Giroud, Raheem Sterling or Fernando Torres spared a thought about them? I wonder if they even knew Indonesian footballers were ritually going months without receiving their salaries and the world’s governing body, FIFA, was happy to turn a blind eye.

I wonder if anyone touched upon Diego Mendieta, the Paraguayan footballer left to die a lonely death in a Solo hospital last year because nobody felt the need to honor contracts and pay him the money he was owed that could have at least seen him return home to spend his final days with family.

Kyais in Industrial Relations

From M. C. Ricklefs’ very recent book, Islamisation and Its Oppoents in Java, c.1930 to the Present, a mention of Kyais (definition here) getting involved in industrial relations:

Kyias who convey sanctity and have supernatural reputations are highly regarded in a society so steeped in ideas of the occult, but kyais are not just other-worldly figures, as we have seen. In Kediri, where they are so prominent, they have been involved in encouraging and facilitating communications between the giant Gudang Garam tobacco factory and its employees when there are industrial disputes. In 2002, for example, the NU  [Nahdlatul Ulama] leaders issued advice (taushiah) supporting the action of the union in defending the rights of workers, urging the management to be more receptive and prudent, asking both sides to restrain themselves and security authorities not to be repressive, and advising all to be wary of provocations. (p. 350)

Max Lane on Gerindra’s ‘Populism’

From Max Lane’s recent article for the Institute of Southeast Asian Studies publication Perspective, in which he sets the stage for Indonesia’s 2014 elections:

Another former general who has declared his candidacy is Prabowo Subianto of GERINDRA. Subianto is more controversial and more strongly associated with the New Order’s reputation for repression. He played an active role in 1997 and 1998 in trying to preserve the Suharto government in the face of popular opposition, even to the extent of organizing the kidnapping of student activists. He was eventually dismissed from the Army for these actions. Subianto’s difficulty is that Gerindra is also unlikely, based on present indications, to win more than 20% of the popular vote. In 2009, Gerindra only received 4.4% of the popular vote, while recent polls suggest that its support rating is at 11%. Subianto’s profile is based more on a perceived comparison, in some segments of the electorate, with Yudhoyono, where the latter is seen to be without combat experience and to be indecisive, while the former is seen as a decisive combat officer. However, this niche will not come into play since Subianto will not be facing Yudhoyono in the 2014 election.

In the 2004 election, Subianto stood as Vice-President in a Megawati-Subianto team. Could this happen again? Gerindra’s parliamentary record has seen it align more frequently with the ruling coalition than with the PDIP. Even in June this year when Gerindra voted against fuel price increases, along with the PDIP (and Hanura and PKS), it did so in a last minute switch. Gerindra and Prabowo used rhetoric that is similar to those of the PDIP on the “peoples’ economics” and so on, but it has also spoken out against wage rises and labour demonstrations while the PDIP has associated itself with such demands.

JG: ‘Execs Slam Higher Wage Demands’

From The Jakarta Globe,* employers react to proposed increases in the minimum wage:

Erwin Aksa, the Indonesian Chamber of Commerce and Industry’s (Kadin) deputy chairman for small and medium enterprises, said the proposal for an increase in labor wages should be made in such a way that would not disturb companies while accommodating the needs and interests of employees.

“If too much of a burden is placed on operational costs expansion will be hurt. Demanding a 50 percent increase, I think, it is too high,” he said.

“There is a formula already, using inflation as the base and the cost of living in a province,” said Erwin who is also the chief executive at Bosowa Corporindo, a Makassar-based conglomerate with diversified businesses, including automotive, cement, energy and property.

Ade Sudrajad, the chairman of the Indonesia Textile Association (API), echoed Erwin’s concern, saying the labor unions’ recent proposal would have a devastating impact on the nation’s industries especially the textile product sector.

And the union response, from Said Iqbal (Confederation of Indonesian Workers Unions [KSPI]) and Nining Elitos (Confederation of Congress of Indonesia Unions Alliance [KASBI]):

The increase in the subsidized fuel price is expected to accelerate inflation and in turn hurt the purchasing power of many Indonesian laborers whose salaries are lower than the average worker in regional markets such as in Malaysia, Thailand and other Southeast Asian nations, Nining said.

Bank Indonesia has forecast inflation to reach 7.5 percent following last month’s subsidized fuel price increase. Inflation quickened in June to 5.90 percent from 5.47 percent in May.

Said was persistent with the unions’ demand. “Renting house costs, transportation costs, the price of food and beverages have increased sharply. Laborers do not receive the government’s temporary direct cash assistance program (BLSM),” Said told Investor Daily. “That makes the laborers vulnerable to falling below the poverty line.”

Nining agreed that the rise in wages must correlate with rising productivity, but she called employers to also consider the vital role of laborers play as the backbone to their companies’ operations.

*Erratum: Previous version of this post said story came from The Jakarta Post.

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Said Iqbal on Mass Organizations Bill

“We will appeal it in the Constitutional Court,” Said Iqbal, president of the Confederation of Indonesian Workers Unions (KSPI), told the Jakarta Globe on Tuesday. “With this bill, local governments can disband local union organizations if they go on strike: industry bodies are all for [the Mass Organizations Bill].”

From The Jakarta Globe

Unions Protest Bill on Mass Organizations

From Reuters:

Under the bill, non-profit groups must abide by a long list of rules, including getting a government permit to operate and publicizing who their donors are.

“We need this (bill) because in Indonesia there are so many mass organizations, one might say too many. And they need to be regulated,” lawmaker Abdul Malik Haramain told Reuters.

“This (bill) also applies to foreign NGOs (non-governmental organizations). Our principle is not to ban them of course, or even to restrict them, but only to make sure they are making a contribution.”

Critics say the bill, which must be approved by President Susilo Bambang Yudhoyono, is too broad and will allow the government to restrict opposition.

Hundreds of demonstrators, mainly from labor unions, briefly blocked roads outside parliament in downtown Jakarta to protest against the bill.

“The government wants to restrict our freedom to unionize and assemble when these things are guaranteed by the constitution,” said union leader Mudhofir, who like many Indonesians goes by one name.

A group of U.N. experts wrote to Indonesian lawmakers in February, warning that the bill threatened to restrict freedom of speech and religion in the world’s most populous Muslim country.