JAKARTA, Indonesia–More than 100,000 union members are expected to fill the streets of Indonesia’s capital today to demand higher wages, better health care and more workplace protections.
“Minimum wages in Indonesia are far behind those in Thailand, the Philippines, and Malaysia…even when living costs in those countries are relatively similar with Indonesia,” said Said Iqbal, president of the Indonesian Trade Union Confederation, or KSPI, one of the country’s largest workers’ groups.
Countries around the region mark Labor Day on the first of May, but this is the first year Indonesia has recognized it as a national holiday. It’s also important this year because it comes just months before voters select a new president, with current President Susilo Bambang Yudhoyono having reached his two-term limit.
Popular presidential contender Jakarta Gov. Joko Widodo won points with workers after taking office in 2012 by agreeing to raise the capital’s minimum wage by a hefty 44%. Workers had been rallying for months for a pay increase, at times tying up traffic in the city and forcing factories to close – albeit briefly.
Getting Mr. Widodo to bow to their demands was a sign of how much trade unions had evolved in the relatively short time since former autocrat President Suharto stepped down from power in 1998.
In the years since, a period of relatively robust economic growth—Indonesia’s economy has expanded by an average 5.8% in the past five years—promptedmany analysts to forecast that the country would become one of the world’s top 10 economies by 2030.
Now, the increasingly confident unions want to get a bigger share of that growth.
This year workers are demanding a 30% increase to next year’s minimum wage, better health care coverage and pensions, and better protection for maids following a series of recent cases of abuse by employers. They also want contract work to be abolished and some are pushing for extra benefits for over a million part-time teachers.
Around 10,000 part-time teachers are expected to participate in the rally, along with several dozen journalists. Up to 400,000 other union members will join rallies across the country. Although the rallies are likely to be smaller than in past years and turnout is usually lower than estimated, Jakarta will deploy up to 20,000 police to ensure security.
After workers’ stepped up their pressure for higher wages in 2012, government officials acknowledged that Indonesia could no longer rely on cheap labor and would need to work harder to train workers to enter higher-value industries.
At the same time, however, they called for sensibility and asked workers’ to moderate their demands.
“Let us not kill the goose that lays the golden eggs,” Vice President Boediono said during a gathering of businesses people and investors back in 2012. He was referring to demands from workers at the time for pay increases of up to 80% — demands that many analysts warned could drive away investors and harm industries like manufacturing, which support millions of the Indonesian workforce.
Critics argue that while the minimum wage has increased in recent years, it hasn’t led to a higher rate of productivity and has put pressure on the revenues of many small and medium-sized businesses.
However, Mr. Iqbal says productivity is similar with other Southeast Asian countries and Indonesian workers are entitled to higher paychecks.