Project report on wage policy and labour relations in Indonesia - surveys the present situation, covers wages, cost of living, family budget, the role of trade unions, employees associations, collective bargaining, labour disputes, dispute settlement, etc., and includes recommendations in respect thereof and comments on relevant legislation.

August 1996 Personnel management and incentive systems help firms establish a comparative advantage. Pay scales and hiring, firing and promotion decisions are central to competitive strategy. Ideally, labor regulations should facilitate voluntary agreements between employers and workers, helping reduce transaction costs. Since the mid-1980s, deregulation has proceeded rapidly in Indonesia. Employment opportunities, the capacity to generate income, and the opportunity to negotiate better working conditions have all expanded. Still, many Indonesians have voiced concern that workers have not shared enough in the benefits of economic development. Many hold the view that increasing the minimum wage would bring the bottom wages up and reduce wage differentials. Additionally, international agencies such as the International Labour Organisation and representatives of the U.S. government have criticized Indonesia for violations of labor standards. In response, the Indonesian government increased workers' statutory rights and removed obstacles to collective bargaining. Real minimum wages doubled between 1988 and 1995. Enforcement of regulations toughened. While in earlier periods statutory rights applied to a minority in the public sector, the expansion of manufacturing employment has broadened the coverage of these statutes, requiring the Ministry of Manpower to perform the nearly impossible task of enforcing them. Now the government should close the gap between statutory rights and voluntarily agreed-on working conditions. This means correcting the legal standards and reducing government intervention in labor disputes. Current labor regulations in Indonesia inhibit constructive discourse between workers and employers in three areas: dismissals, dispute resolution mechanisms, and contributions to social security. More appropriate legislative action, which also takes into account the role of other agencies is needed in two areas: job safety and child labor. Personnel management and incentive structures help firms establish a comparative advantage. Pay scales and hiring, firing and promotion decisions are central to performance evaluation and competitive strategy. Individual and collective bargaining is at the heart of labor-management relations in modern enterprises, and industrial action (or the real threat of it) is generally part of negotiation strategy. Inviting public intervention rather than allowing such mechanisms as strikes and lockouts to operate isolates negotiations from market conditions. Ideally, labor regulations should facilitate voluntary agreements between employers and workers, helping reduce transaction costs. They often do the opposite -- and also discourage the creation of jobs. Keeping Indonesia's economy competitive requires a system of industrial relations that relies on voluntary negotiations of wages and working conditions. The tasks workers perform and the employers for whom they perform them must be subject to change. This process is a normal feature of healthy labor markets. This paper -- a product of the Poverty and Social Policy Department -- is part of a larger study of the labor market in Indonesia undertaken by East Asia and Pacific, Country Department III. It was presented at a joint Ministry of Manpower-World Bank workshop, Indonesian Workers in the 21st Century, Jakarta, April 2-4, 1996.

The book focuses on Indonesia's most pressing labor market challenges and associated policy options to achieve higher and more inclusive economic growth. The challenges consist of creating jobs for and the skills in a youthful and increasingly better educated workforce, and raising the productivity of less-educated workers to meet the demands of the digital age. The book deals with a range of interrelated topics---the changing supply and demand for labor in relation to the shift of workers out of agriculture; urbanization and the growth of megacities; raising the quality of schooling for new jobs in the digital economy; and labor market policies to improve both labor standards and productivity.

September 1995 Indonesia's labor market in the 1990s is characterized by rising labor costs, reduced worker productivity, and increasing industrial unrest. The main problem is generous, centrally mandated, but unenforceable worker benefits. Legislation encouraging enterprise-level collective bargaining might help reduce some of the costs associated with worker unrest. Indonesia's labor market in the 1990s is characterized by rising labor costs, reduced worker productivity, and increasing industrial unrest. The main problem is generous, centrally mandated, but unenforceable worker benefits. Legislation encouraging enterprise-level collective bargaining might help reduce some of the costs associated with worker unrest. Policy measures Indonesia adopted in 1986 led to a boom in manufacturing exports and foreign direct investment and put Indonesia on the path to rapid export-oriented, labor-intensive growth. In the second half of the 1980s, because of abundant cheap labor, real labor costs did not rise but worker productivity did, partly through improved education and training of the workforce. There are increasing signs that in the early 1990s Indonesia's competitiveness is being eroded by several factors: rising labor costs, low worker productivity, and increasing industrial unrest. One problem is generous, centrally mandated benefits, detailed in the new social security law. The estimated cost of the government-mandated benefits package would be a hefty 12 percent of the wage bill. The other problem is that the government has greatly limited organized labor, viewing it as a threat to political and economic stability. This approach of mandating benefits centrally through legislation without empowering workers to enforce compliance with the legislation (or negotiate their own benefits packages with employers) is beginning to strain industrial relations in Indonesia. Policymakers should consider allowing effective, democratic plant-level worker organizations. Legislation to encourage collective bargaining at the enterprise level would enable workers and managers to negotiate outcomes that might improve worker productivity. Improving dispute resolution mechanisms and the workers' ability to be heard in the workplace could reduce the incidence of illegal or wildcat strikes. But more than legislative changes are needed. Changes in approaches to industrial relations, deregulation, and increased competition in product markets could make unions' roles more positive, while limiting their negative role. This paper -- a product of the Office of the Vice President, Development Economics -- was prepared as a background paper for World Development Report 1995 on labor.

This ILO flagship report examines the evolution of real wages around the world, giving a unique picture of wage trends globally and by region. The 2020-21 edition analyses the relationship of minimum wages and inequality, as well as the wage impacts of the COVID-19 crisis. The 2020-21 edition also reviews minimum wage systems across the world and identifies the conditions under which minimum wages can reduce inequality. The report presents comprehensive data on levels of minimum wages, their effectiveness, and the number and characteristics of workers paid at or below the minimum. The report highlights how adequate minimum wages, statutory or negotiated, can play a key role in a human-centred recovery from the crisis

Oversigt over medlemsstaternes implementering af ILO's regler for arbejdstilsyn