Democratic Transition, Economic Crisis, and Labor Reform in Indonesia.

Although a series of labor law reforms that strengthened basic labor rights were passed in Indonesia soon after the fall of Suharto, attempts to pass comprehensive reforms affecting issues related to labor flexibility have for the most part failed. While labor has secured stronger political rights, employers have been unable to roll back the majority of provisions that defend labor protection. Perhaps the most puzzling aspect of the politics of labor reform is that while labor played little role in bringing down Suharto and is still quite weak and fragmented, it managed to secure many gains in labor law. I argue that labor success in the immediate post-Suharto years can be explained by international pressure to restore basic labor rights and the early remobilization of labor, in contrast to employers, in the wake of the Asian financial crisis. Although unions were weak they managed to organize large and disruptive protests whenever changes that promised to increase flexibility were enacted. In contrast, employers were caught off-guard and showed few signs of acting as a coherent interest group. By the end of 2000, however, employers had counter-mobilized, and they made rolling back some of these early gains for workers a primary goal. This reactivation of the peak business association boded poorly for labor. However, the strenuous opposition of both employers and unions to two draft bills in the latter half of 2002 led the committee overseeing the bills in the legislature to institute a bipartite process to revise them, and both business and many unions chose to participate in this process. This bipartite structure of negotiations leveled the playing field between unions and employers, and labor was thus able to defend its political gains, while employers were only partially successful in achieving their goal of increased labor flexibility. [ABSTRACT FROM AUTHOR]