eNewsletter

Labor unions in Indonesia are growing in power and are using their advantage to press for higher benefits.  As of 2011, about 30% of the workforce holds membership in one of Indonesia’s 80 labor unions.  Strikes are being held across many industries, including gold miners, pilots and supermarket staff.  These strikes have been primarily over wage increases.  Laborers feel as if they are entitled to greater wages as Indonesia’s economy continues to grow, from 4.5% in 2009 to 6.1% in 2010.  

Indonesia currently has one of the lowest annual salaries in the Asia, with an average minimum annual salary of $1,560.  China’s average minimum annual salary is about $2,100.  With increased strikes and probable rising wages, Indonesia’s minimum wage may catch up to China. Companies that moved to Indonesia from China may lose their advantage of low labor costs.

There are higher risks of violence as laborers continue to fight for a greater share of Indonesia’s profit.  Local residents have attacked an Australian exploratory camp as well as an oilfield in the past few months.

Laborers will likely continue to fight for higher wages and benefits.  Pilots have pledged to strike again after contract negotiations failed in July.  Miners for a U.S. company have planned to strike for the second time in two months to encourage pay negotiations.  The unemployment rate is decreasing, down to 6.8% in 2011 from 7.6% in 2010.  This lower unemployment rate is allowing laborers to continue to have more say in their work conditions.