Sending shockwaves across Indonesia, Jokowi recently raised the minimum wage by 44 percent. Such a move would be controversial anywhere, but Jakarta is the most populous city in south East Asia. It is not just a testing ground for Indonesia, but for the whole region.
Following the hike Jokowi instantly became the favourite amongst young Indonesian voters for the 2014 presidential election. In South East Asia his name was the second most “trending” word on twitter in 2012, second only to hit single Gangnam Style.
Jokowi’s move was a brave one and has been denounced by employers and business “leaders” who have instantly appealed for exemptions from the new law. The hike will place Indonesia’s minimum wage above that of Ukraine and even Bulgaria, a member of the European Union.
Jokowi has been condemned as a populist, but the move really represents the growing fear of Indonesian elites with an increasingly unified and vocal trade union movement, including close collaboration between several of the four labour federations.
Since Indonesia’s one-day general strike in October that saw two million workers take action the situation has rapidly escalated. In November the Indonesian president was forced to declare an end to the era of “cheap labour” (known as “burah murah” policies) and the vice president said labour welfare was top of the government’s priorities. On 23 November 30,000 workers in the Batam area, off the coast of Singapore, went on strike. The workers have been part of the important phenomenon of spread of independent unions which have emerged since the fall of the Suharto dictatorship in 1998, and especially during the last five years.
But the strikes haven’t come without a crackdown. In Papua, after the disbanding of a meeting by police, six people were killed. This prompted demonstrations linking the murders to a call for independence from Indonesia.
Remarkably even Singapore, the city-state hardly known for a militant labour movement and where strikes are still restricted, saw its first illegal strike in 26 years by bus drivers at the beginning of December.
Both Indonesia and Singapore also held Occupy protests. Occupy Jakarta maintained a permanent picket outside the Stock Exchange throughout December 2012. Although the number of people ranged from 20 to 200 it played an important role in uniting diverse groups in a way they hadn’t been seen since the movement against Suharto in the 1990s.
For the moment the Indonesian economy continues to grow – by 6.4 percent last year. But it is buoyed by domestic consumption, rather than export revenue. Coal and palm oil exporters are feeling the pain of a slowdown in India and China and the fear of the US “fiscal cliff” makes the future uncertain. It is telling that the political ramifications of the crisis are creating political and social fractures in places we are repeatedly told are stable. Indonesia is a useful example, Singapore is a remarkable one.
In the past, Indonesia has been referred to as the “Nike economy” due to the high proportion of Nike products made there. It seems in the coming months a more appropriate nickname could well be “strike economy”.
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