Abstract
Indonesia's new wage policy mechanism made a new history since Joko Widodo (Jokowi) became President. The first minimum wages policy in Indonesia was implemented in 1969 in which the determination comes from society's monthly necessities through a discussion involving labor, employer, and state, it is known that the determination is no longer using aforementioned variables but it is rather based on a market-standard formula. This paper exploring the logic political-economic of wage policies implementation based on neoliberalism in the first presidency of Jokowi, which has implications for affirming cheap wages policies. This research uses a qualitative method by comparing two regions with different economic bases, namely Bekasi as the largest industrial area in Southeast Asia and Yogyakarta as the province with the highest national economy inequality and the cheapest national minimum wage representation. The findings of this research show that this new wage formulation is emerged from the ideology of corporatism that takes place in every power transfer process and has the implication of reinforcing wage inequality that occurs in the local context in Indonesia. Politically, this regulation eliminates the democratic mechanism in the form of tripartite through a survey of monthly necessities which is carried out by labor, government and employer every year and has divided the strength of trade unions in fighting for the determination of decent wages.
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Source: Processed from google trends (2011–2013)
Source Processed from internal data of ABY (2020–2019)
Source: Wage allocation survey for 7 Indonesian industrial estates (House of Diah Pitaloka) 2016
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Notes
Indonesia's minimum wage determination policy has undergone three changes since it was first implemented, namely using the concept of Minimum Physical Needs (1969–1995), Minimum Living Needs (1995–2005), and Decent Living Needs (2006–2015).
The survey becomes once every five years in the new mechanism.
Member of SPSI Bekasi.
Member of Labor Democratic Trade Union/ Federasi Serikat Demokratik Kerakyatan (FSEDAR) Bekasi.
Chairman of Association of Indonesia entrepreneurs / Asosiasi Pengusaha Indonesia (Apindo) Yogyakarta Province and PT Budi Manunggal owner.
Apindo Bekasi District and Managerial team of PT Rapipack Astritama.
As an illustration, FSPMI has 127.429 members in 2011 (FSPMI 2013).
PT Pixel Yogyakarta unilateral layoff.
Ortindo Digital Printing Yogyakarta Labor.
Manpower Office of the Bekasi District field of industrial relation.
PT Budi Manunggal dismissal Labor.
PT Pixel unilateral dismissal (Former company managerial team).
Confederation of Indonesian Labors Unions/ Konfederasi Persatuan Buruh Indonesia (KPBI).
Industrial Relations Field of the Yogyakarta Manpower Office.
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Acknowledgements
I would like to thank my supervisor Prof. Dr. Erwan Agus Purwanto for sharing me much of insight related to this research. I would also like to thank all labors, employers, and the governments in the Yogyakarta and Bekasi who have gave their time to be willing as informant in this research.
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The research was funded by Faculty of Social and Political Science, Universitas Gadjah Mada, Master Student Research Grant 2019.
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As an author article entitled “Indonesia's Cheap Wages Regime: The Political Economy of Minimum Wages Policy under Jokowi Presidency”, I have no affiliations with or involvement in any organization or entity with any financial interest (such as honoraria; educational grants; participation in speakers’ bureaus; membership, employment, consultancies, stock ownership, or other equity interest; and expert testimony or patent-licensing arrangements), or non-financial interest (such as personal or professional relationships, affiliations, knowledge or beliefs) in the subject matter or materials discussed in this manuscript.
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Wulansari, A.D. Indonesia's Cheap Wages Regime: The Political Economy of Minimum Wages Policy under Jokowi Presidency. Fudan J. Hum. Soc. Sci. 14, 417–444 (2021). https://doi.org/10.1007/s40647-021-00324-8
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DOI: https://doi.org/10.1007/s40647-021-00324-8