Workers' rights in bonded zones must be guarded

Opinion and Editorial - August 25, 2006

Thamrin Mosii, Jakarta

Recently, the chairman of the Investment Coordinating Board (BKPM) announced he was "exploring the possibility of relaxing the implementation of the labor legislation" in special economic zones (SEZs) in Riau Islands Province (Labor rights may be curbed to up investment in SEZs in the June 28 edition of The Jakarta Post). The idea is a bad one, and, in the long run, will not achieve its goals.

Under the New Order regime, employees had few effective means of raising issues or resolving claims. Only one trade union was permitted nationwide, filled with government appointees who ensured that the organization made few efforts to improve working conditions. When independent workers' groups held demonstrations, the police and military intervened, often violently. Leaders who built up independent unions were jailed, beaten, or even murdered, as in the tragic case of the East Java local union leader, Marsinah.

According to the law, workers can now join independent unions freely, but problems remain. In many places, employers -- no longer able to call on the police or military to forcibly settle a dispute -- hire local thugs to attack workers. This is especially frequent in bonded industrial zones, where the employers have tight control over access. Despite such attacks, millions of workers have exercised their rights over the past eight years to join independent trade unions.

Batam Island, which contains an SEZ, provides a good example of what has been happening recently. Up to three years ago, despite its high cost of living due to its location near Singapore, Batam regularly adopted one of the lowest minimum wages levels in the country, leaving even those working 60-hour weeks near the poverty line.

But with courageous and competent efforts by both the national and local leaderships in my union, membership went from under 5,000 in 2003 to over 22,000 today. The minimum wage in Batam, although still below Jakarta and the level needed for a decent standard of living, increased at a faster rate as real trade union leaders, responsible to their members, became involved in the process.

Now, the BKPM proposes to short-circuit these gains.

On the face of it, the idea of developing special zones where normal legal rights do not apply is an offense to the democratic development of Indonesia. If we have zones where workers cannot form trade unions, can we also have zones where freedom of the press does not apply or where freedom of religion is not permitted by law? How about special areas where children can work in dangerous jobs, or women are placed into forced labor?

Everyone understands that no right is absolute, and, in certain conditions, restrictions on rights are necessary. But denying rights in special geographic zones so that some people can exploit others in those areas is totally unjustified. Such "no-labor-rights zones" violate the international commitments Indonesia made when it ratified ILO Convention 87 on Freedom of Association and Protection of the Right to Organize, and Convention 98 on the Right to Organize and Bargain Collectively.

But in addition to violating the basic rights of workers, special zones with reduced labor rights will not work. Eliminating unions only removes the most effective method for workers and employers to settle disagreements without losing production. According to statistics from the Manpower and Transmigration Ministry, over the past several years between 65 and 80 percent of all strikes have been staged in non-unionized workplaces.

In the past two years, my union signed four collective bargaining agreements in the Batam bonded zone, and five more are currently being negotiated, without a single strike. Compare that to the widely publicized recent violence between police and workers in the Bangladeshi export processing zones, where union rights have been restricted for years.

Even the World Bank, not generally considered a pro-union body, found that unions have a positive effect. A Bank survey of over 1,000 labor market studies (Unions and Collective Bargaining, Aidt and Zannatos, 2002) concludes, "In firms where industrial relations are of a 'high' quality (in terms of a low number of unsolved grievances, low strike activity, and so on), the presence of unions tends to increase productivity levels. The same is true in firms that are operating in a competitive product market environment."

Special zones with reduced labor rights will also activate several trade barriers. The World Bank's private investment division, the International Finance Corporation (IFC), now extends loans only to employers that respect all ILO Fundamental Principles and Rights at Work. Under this policy, employers setting up in "no-labor-rights zones" may not receive IFC loans.

In addition, both American and European trade policies permit complaints of unfair competition against countries that do not permit trade union rights. Such complaints have caused trade difficulties for countries with "no-labor-rights zones", and can potentially result in higher tariffs on exports.

The BKPM chairman's statement that union members are "easily provoked by third parties" is preposterous. Employees often call strikes when employers fail to provide the minimum pay or working conditions required by law. If employers want to reduce the number of labor disputes nationwide, they can take one simple step: Follow the labor laws of the country.

Like the government's aborted attempt to amend the Manpower Law (No. 13 of 2003) earlier this year, the BKPM announcement came without any prior consultation with union leaders. To improve the investment climate over the long term, the government and employers must stop springing anti-union, anti-worker proposals about Indonesian workers, and instead engage in real social dialogue with legitimate workers' representatives.

Together, we can build an industrial relations system that works for all three partners. But the BKPM proposal for "no-labor-rights zones" will take us back to the bad old days, when the police and military were regularly called in against workers who found themselves in dispute with their employers. Is there anyone who really wants this?

The writer is president of the Central Board of the Federasi Serikat Pekerja Metal Indonesia (Indonesian Metal Workers Trade Union Federation).