All this time we might have worshiped the wrong God. It’s the global supply chain that put us here in Batam. It is the one who rules and determines our lives…it is the God
- The joke uttered by an Indonesian unionist after hearing an explanation of Batam FTZ electronics workers’ position within the global supply chain
A wide variety of accounts of global supply chains (GSCs) have been produced which emphasize how financialization and technological innovation have removed the barriers to capital mobility. In this article, we approach the global supply chain (GSC) in the context of the very nature of capital, which both produces and perpetuates the conditions for capital accumulation, i.e. where an abundant labour reserve is produced through the opening up of the new territory for a production space. This opening up results in changes in the existing social structure, local culture, land ownership and environment. I would like to show how one of the essential aspects of the GSC is the proliferation of capital’s control over every aspect of human life, re-shaping the society to serve the interests of the market.
Using the case study of Batam, part of the Batam-Bintan-Karimun free trade zone (BBK FTZ) Indonesia, as Singapore’s ‘backyard’ for electronics manufacturing, we try to look at how the GSC instigates not only precarious employment in the factory but also a precarious society, where every individual must bear the externalization of the production cost. Using the joke above as an ironic metaphor depicting the centrality of GSC in society, subsuming all human activities into the circuit of capital, we will elaborate how this God works in practice and offer some strategies to explore in seeking ‘another God’.
Knowing the God
The rapid development of the electronics industry and the booming of economic growth in the late 1980s encouraged Singapore to be aggressive in opening a new production space and seeking a cheap labour supply, land and water from its neighborhood country, Indonesia. The increasing wage standard and the short supply of labour along with the transition of the electronics industry in Singaporerequired the opening up of a new territory for the production space. The transition of the electronics industry took place in late 1980s and 1990s where contract manufacturers (CMs) transformed into original design manufacturers (ODM)
The entrance to BatamindoIndustrial Park– the first industrial park on BatamIsland. Photo: AMRC
and electronics services manufacturing companies (EMS). This was also followed by the relocation of low end manufacturing to other countries.
The opening up of a cluster of production spaces in Batam to serve the Singapore-based electronics companies has turned Batam into a magnet attracting workers to migrate from other islands in Indonesia. The huge migration influx has stimulated the emergence of an informal service industry including ‘underground’ economic activities mostly to provide affordable service for workers. The range of informal activities is varied, encompassing food vendors, illicit or unlicensed transportation business and a sex industry. Other informal economic activities, namely the clean water business and supply of electricity, will be given special attention as they relate to the role of the State.
The industry expansion, requiring the establishment of economic corridors and the opening port zones for distribution, also attracts casual workers in the construction and transportation sectors. The resulting influx of migration then triggers social tensions from land squatting and trafficking. Just as the joke says that global supply chain is the God, all economic activities in Batam are subsumed by the circuit of capital within the zone. So, the global supply chain is not only the ‘God’ for factory workers but also the whole society.
God makes the profit; humans pay and die
We work hard everyday at this big ‘kitchen’. We must cook good food and serve it to our masters in Singapore. They enjoy the food and dump back the waste to us. We never enjoy the food.
- A worker in Batam describing the workers’ life
The sarcastic metaphor of serving the food for the big master sums up the general working conditions in the electronics production line in Batam. Batam currently houses 21 industrial parks with over 1,000 foreign companies in residence. Indeed the most notable part of the industrial zone is that the industrial practice in the zone always blurs the line between regulated and unregulated activities. By opening up a new territory for the industrial zone, the GSC benefits from extraterritorial status, thus enhancing the profit of companies through tax avoidance, cheap land leasing, and access to water and electricity. Of course, the profit is also enhanced by cutting labour costs; cheap labour, already turned into capital, is also an incentive provided by capital-receiving countries.
Most of the workers routinely work about 100 – 200 hours of overtime every month. Though in most of the places overtime is voluntary, the wages (minimum wages) they earn is so low that most of them end up working overtime. One of the factories tried to restrict the working hours to eight hours and did not allow overtime, however the workers did not like it as it effectively meant lower wages for them compared to the other workers who could work overtime. This reflects the problem of implementation of Codes of Conduct, when wages are too low for the workers even though they maybe the legal minimum wage.
In 2009, the workers in Batam set up an alliance against the amount of minimum wages stipulated by the government in favor of the employers’ association. The dispute between the workers’ alliance versus the employers’ association over the minimum wages policy ended up at the State Administrative Court. The employers proposed raising the wages to 842,000 IDR(US$90). Meanwhile, according to the workers’ survey on living wages, the minimum wage in Batam should have reached 1,200,000 IDR(US$119). The minimum wage in the Batam region is lower compared to some parts of Indonesia like Jakarta, even though Batam is a very expensive place due to its close proximity to Singapore.
|Besides creating precarious employment inside the factory, GSC as ‘the God’ also creates a precarious society where everyone scrapes a living yet unconsciously subsidizes the production process, i.e. where each individual bears the externalized production cost of the global supply chain.|
In recent years, workers in Batam have decried the practice of flexibilization that has dismantled the union power. Around 79% of the workforces in RiauIslandsprovince are contractual and outsourced workers. Workers, recruited through an agency, are obliged to pay registration and placement fees to the agency. The rate of the registration fee ranges from 10,000 IDR(US$1.07) to 1,500,000 IDR(US$160), while the placement fee ranges from 150,000 IDR(US$16) to 1,800,000 IDR(US$192.5). It is a common practice for the agency to set up an agreement with the company to deduct the wages to pay back the worker’s placement fee in installments. Once employed this way, the deprivation of workers’ job security, a manipulative industrial strategy to keep workers docile, has been the main reason preventing workers from joining unions.
It was also generally observed that many workplaces are using chemicals and solvents and most of the workers are quite unaware of the risk that these maypose to their health. Working routinely for 10 to 12 hours a day increases the exposure time and subsequent dose of hazards including chemicals. Cases of breast, blood and brain cancers, as possible occupational diseases, have been found among the workers.
Precarious Society in God’s Promised Land: Migration Influx, Human Trafficking, Illegal Dwelling and Toxic Waste
Besides creating precarious employment inside the factory, GSC as ‘the God’ also creates a precarious society where everyone scrapes a living yet unconsciously subsidizes the production process, i.e. where each individual bears the externalized production cost of the global supply chain.
After negotiations with Singaporeand other capital-investing countries, institutional arrangements have been made in Indonesiato open up new territories for production and facilitate the mobility of capital. Besides providing business ease and incentives for the industry, the state also provides land, water and other natural resources for the economic corridor – infrastructure or transportation projects connecting two places - and downstream industry – industry processing the outputs of other industries. The establishment of the economic corridor is usually preceded by land expropriation by State.
In turning the whole society into proletarians, radically dependent on the circuit of capital, we arrive at the process by which the capitalist managed to maintain its control over the society. In ‘Modern Times’, Charlie Chaplin’s classic movie, a line of workers is represented working on the production conveyor belt. The movie shows how workers are disciplined by all the machinery and put under tight surveillance. The Great Depression, followed by the massive unemployment, where workers had to compete against each other to get a job and automation was delivered by the sophistication of machinery, allowed capitalists to exercise control mechanisms to take as much as it could get from workers.
In the present day, informalization, which was once considered a capitalist strategy for dealing with economic downturn, has been ‘normalized’. The informalization means that job insecurity has become the effective means to control the workers. Outside the factory, there is an abundance of workers whose means of production and rights have been dispossessed and have become available to get entangled in the web of production and the market. These workers sell affordable food for the low-waged workers, and provide other services as well (elaborated below).
Thus we are witnessing the situation of ‘the poor serving the poor’ but, of course, not in a solidarity sense. The proponents of the development approach often argue that the opening up of new territory for the industrial zone has the potential to create employment in informal economy activities that are viewed as ‘income-generating’ for those who are not absorbed into the formal labour market. In Indonesia, where more than 70% of the total workforce is engaged in the informal economic activities due to various reasons like dispossession of the means of production or land, unaffordable public facilities and other State systemic failures resulting in a reserve of cheap labour, the establishment of an industrial zone then becomes the magnet for the poor to scrape a living in ‘the considered promised land’.
Below are examples on how everyday activities are subsumed into the circuit of capital in such industrial zones
The most noticeable social impact of the zone is migration influx from other islands and provinces. From 2000-2010, the population in Batam has doubled from around 550,000 to 1,050,000. Besides for work at factories, many come to Batam to scrape a living in the service sector. Poor public transportation facility has encouraged the emergence of ‘unregistered’ taxi business. The drivers usually come from other provinces in Sumatra Island. Many also come to Batam from Java Island to work as casual construction workers or porters in the port zone.
Batam is also notorious as a major transit for trafficking women to the neighboring countries and Middle East. Currently, there are at least 41 illegal ports used for smuggling trafficked women. Since early 2000, the number of trafficking cases in Batam has reached an alarming level, as every week around 300 women and children are ‘sold’ to overseas and inside Batam. The local government, struggling to fight this practice, issued a law in 2002 requiring migrant workers to show a guarantee letter from the employer. The law, proven to be useless, only addressed the tip of the iceberg. Behind this rampant trafficking, there is an organized network of crime which is ‘untouchable’ by law.
Illegal Dwelling Place(‘Wild Housing’)
The most noticeable change in Batam is the development of illegal dwelling places, famously known as ‘wild housing’. Constructed overnight on a piece of squatted land, these makeshift shanties shelter thousands of informal workers and job seekers. Despite the economic growth and capital influx to Batam, only 30 percent of the population is absorbed by the formal labour market. Illegal dwellings then become affordable housing for informal workers who earn around US$1-2 per day.
Factory workers whose contracts have expired and who are seeking new jobs, also build their makeshift shanties. Due to the unclear status of land ownership, state electricity and water companies deny thousands of illegal dwelling occupants access to their services. The occupants must then rely on illicit service providers, for example vendors who supply them with electricity from their own generators. As the water is highly contaminated and public water services are not even accessible for informal workers, people in the zone also heavily rely on small shops or vendors from whom they buy ‘consumable’ clean water.
Workers waiting in front of a recruitment agency. Some will work in the industrial park, while others will be allocated work in Malaysia. Photo: AMRC
The government has attempted several times to demolish the illegal dwellings. The demolitions always end up in violent clashes. The occupants have taken up several protests demanding their rights to access electricity, water and land. Most of the occupants are Batam ID holders, making them target of politicians’ campaigns during election time. Being aware of their political rights as lawful citizens, during protests in October 2010, the occupants of illegal dwellings threatened to boycott the provincial election. It is estimated that the number of illegal dwellings in Batam has reached more than 50,000 units occupied by around 200,000 people – i.e. two percent of the total population. At present the illegal dwelling units have outnumbered the half-empty residences constructed by private developers.
Industrial Waste and Environmental Issues
Batam is also a favorite destination for smuggling hazardous industrial waste or chemicals, which get substituted for the high price, safe material. In 2009, the Ministry of Environment investigated the involvement of state officials in smuggling copper slag to Batam. The copper slag was to be used as substitute for ferro sand. Another highlighted case of toxic waste import to Batam took place in 2005 when Singapore imported one million tons of hazardous heavy metal-containing waste to Batam. Besides toxic waste dumped by the neighboring countries, it is estimated that hundreds of factories in Batam do not have waste treatment facilities.
One worker mentioned that many factories in the Panbil industrial zone in Batam dump their metal containing liquid waste without any proper treatment. In Batuaji, another of the industrial zones in Batam, factories dump the waste in the housing area. The occupants of the housing area in Batam often suffer from skin rashes after using contaminated water. Some workers earn additional income by engaging their family members also in collecting industrial scraps such as printed circuit boards. Due to lack of knowledge regarding the toxic materials in the scraps, workers’ families are also exposed to this industrial hazard.
Thus we witness how the industry, with the state on their side, re-shapes the community to serve their interests. The externalization of production costs goes well with the situation where the poor have no options but to survive by any possible means.
Let’s Create Our Own God: The Collective Power Of The Working People
The prominent challenge then lies on how to denounce the power of this god. It is important, first of all, to be aware of the trap posed by the global supply chain. The complexity of the global supply chain is often simplified by those who believe that some of its shortcomings can be repaired by fixing the hole in the capitalist social relation. For example, one of the most common traps is de-contextualizing the capitalist social relation by undermining the collective power of workers and substituting it with a consumer campaign targeting the buyers and demanding the buyers to put pressure on their local chains. The buyers, forced to defend their public image, enact codes of conduct at the workplaces. As a result, more workers are engaged in the logic of corporate social responsibility in which buyers’ controlling power over their local chains is given precedence over workers’ collective power.
At the local level, reflecting on the case study of Batam and also similar stories from the industrial zones in many developing and least developing countries, democratic control over production and natural resources must be inherent in designing a resistance strategy. Global supply chains will continue to make advances if the working people are weak. Redirecting the State to be on the side of the people can be a long-run strategy. However, what is absent in the explanation of precarious society in ‘the promised land’ is the political collective power of the people. Therefore, challenging the global supply chain requires not only the strong collective power of the factory workers but also of the whole working people. Cross-sectoral alliances, a strategy unifying workers and community, and attempts to create an alternative society beyond capitalist social relations are a few examples that need to be explored to counter the power of the market.
At the international level, we have witnessed how the economic downturn pushing for austerity measures in many countries including the advanced capitalist countries, has triggered an unprecedented scale of mass resistance. This bleak reality somehow opens an opportunity to rejuvenate the international solidarity, considering that the impacts of crisis are severely suffered by the working people all around the globe. Indeed, there are always local objective conditions that shape the character of resistance in every country. However, the solidarity must overcome the strategy of divide-and-rule exercised by capitalists to control workers. Exchanging various forms of solidarity support, sharing and propagating strategies to counter the market power and linking up workers’ struggles across the world can be an initial step to rejuvenate the international solidarity which relies on the collective power of the working people. So, the collective power of the working people is the true God!
- Bill Guerin, ‘The Battle for Batam’, Asia Times Online, 12 July 2003.
- David Harvey, A Companion to Marx’s Capital, (London: Verso, 2010)
- The Jakarta Post, 8 April 2009.
- The Jakarta Post, 3 April 2009.