The global economic crisis which was triggered by the meltdown of the US financial market, the Mecca of capitalism, blatantly signifies that capitalism is digging its own grave. Capitalism has undergone several severe crises. The current crisis is not merely a financial crisis but also an overaccumulation of wealth and concentration of the means of production in the hands of a few. In contrast, the majority of the world population is sinking into deeper poverty.

The global economic crisis which was triggered by the meltdown of the US financial market, the Mecca of capitalism, blatantly signifies that capitalism is digging its own grave. Capitalism has undergone several severe crises. The current crisis is not merely a financial crisis but also an overaccumulation of wealth and concentration of the means of production in the hands of a few. In contrast, the majority of the world population is sinking into deeper poverty. The high rate of unemployment, unavailability of job opportunities, politics of low wages, and flexible working system show the barbaric process of capital accumulation. This has led to a situation where working people can no longer afford to meet their basic needs, especially those of food and housing. 

A strategy to overcome the crisis has been developed. We have witnessed how the IMF and World Bank have tried to prescribe a remedy for the late 1990s crisis which then encouraged a race-to–the-bottom situation for poor countries. Besides inducing a flexible labour market supporting a free trade regime along with flexible capital mobility, and goods and service distribution, the prescription included the exploitation of productive resources (natural and human resources). The term ‘world economic globalization’ justifies privatization projects and other exploitations. Nevertheless, the remedy is not sustainable to save capitalism from crisis. This time as well as in the late 1990s, the state has chosen to stabilize the capital market instead of supporting its people. This article elaborates how ABM (Labour Resistance Alliance) as a progressive worker alliance in Indonesia is developing strategies in dealing with the financial crisis.

How Indonesia Government Deals with The Crisis and The Impact of State Policies upon Workers

Recently, Susilo Bambang Yudhoyono, the Indonesian President, issued a statement denying that Indonesia would be hit severely by the ongoing crisis. The government and Bank Central (Bank Indonesia) then instructed some state-owned enterprises (SOEs) to conduct a share buyback plan. This programme was intended to stabilize the capital market. Many analysts refer to this programme as being cosmetic, to beautify the stock market. This is because the buyback plan or repurchase of shares sold on the open market applies to companies whose shares are undervalued. The government has published a list of several SOEs that have been instructed to conduct the share buyback plan. The irony of this strategy is that those SOEs are the ones considered to be healthy SOEs which need capital reserves to expand their business. This policy has invited controversy from the public. While an economic downturn is coming, the government has chosen to invest the money in a plunging market. Many view this policy as reflective of how the State is bent over by the will of a capitalist shark.

Another effort to ‘escape’ from crisis is sacrificing workers. As for labour policy, a decree has been jointly issued by four ministries (Manpower and Transmigration, Trade, Industry and Internal Affair Ministries), intended to maintain national economic growth in anticipating global economy downturn. This joint wage decree states that the State will no longer intervene in setting minimum wage policy. Essentially, the intervention of the State in stipulating a minimum wage policy is to back up the bargaining position of workers. Nevertheless the practice of a minimum wage policy in Indonesia has never brought improvement to workers’ lives. Even now, many factories still pay workers with below-minimum wages. Worker groups, meanwhile, always consolidate themselves every year, struggling for living wages including struggle at the negotiation table. What has taken place in Indonesia is that the real wages of workers is always crushed by inflation rates.

Meanwhile, the issuance of joint wage decree brings workers’ lives to the bottom. The wages starting from 2009, according to this decree, must not increase at a rate higher than the national economic growth rate. In 2008 alone, the national economic growth is only six percent with 12 percent inflation rate. So, if the real wages must increase at a rate lower than the economic growth rate while the inflation rate keeps going up then workers work only to subsidize the production process because actually they earn nothing as they give away their manpower to produce goods. This wage joint decree has triggered nation-wide workers demonstration in Indonesia.

Another crucial and controversial issue emerges from this decree, which is that minimum wages are to be decided in bipartite negotiation between the employer and workers. This will put workers working in production sites where the right of freedom of association is neglected into a situation in which the employer has full control over working conditions. Another important issue is that millions of workers in Indonesia will lose their jobs because of the economic downturn. Meanwhile employers often come up with market malaise as a reason to shut down production sites. This situation requires a comprehensive strategy. In the past, workers often demanded severance payment as the employer just flew away to other regions seeking cheaper production costs. Now, the strategy must go beyond that. We must develop a strategy in which workers have the opportunity to gain a meaning working class victory. The issue of mass layoffs is also threatening SOEs workers. In the past, SOEs workers did not work together with radical unions as SOEs unions are co-opted by the State. Now, the privatization issue has encouraged SOEs unions to work hand in hand with radical worker unions. There is commonality in terms of an anti-privatization platform. This is an opportunity as well to build inter-sector solidarity among workers.

Strategies and Initiatives Developed by Workers in Dealing With the Crisis

Mass layoffs that have started taking place in Indonesia are conducted without any regard for the regulations stipulated by the labour law. Since 1998, it has been a trend in Indonesia that mass layoffs are conducted with the intention of changing workers’ status from permanent to contract-based. In organizing workers facing layoff threats, the strategy is not demanding severance payment; the strategy here is to demand to be reinstated. As workers always come up with strategies to fight against the mass layoffs, employers then strike back by shutting down the production sites. Then workers must improve their strategy—to one of occupying the factory.

Right now in Indonesia, workers at PT Istana Manogliatama in North Jakarta where employers dismissed the workers and offered reinstatement on contract basis are applying strategy of occupying the factory. Responding to huge protests against dismissal, the employer at PT Istana shut down the production site. Nevertheless, the organizing of dismissed workers was not intended to demand severance payment. Workers were organized to occupy the factory. It is common in Indonesia that the military is always involve in labour disputes by attacking long-lasting workers’ protests. Yet, if workers are persistent to continue the struggle then the military gradually will just ignore the struggle, assuming that workers will eventually cease the struggle because of lack of energy and resources. Ex workers of PT Istana Manogliatama have waged their struggle for over one and half years. It is important to maintain the spirit of workers who are going through this long struggle. After occupying the production site, the strategy was then escalated into taking over the factory and the production process. This strategy is possible to implement with support from other unions and the alliance ABM.

Ex-workers at PT Istana have started the collective production process over five months ago (i.e. July 2008). The strategy was initiated by setting up a committee, which was designed to take over the factory and initiate the production process (KOMPAP). The membership of the committee consists of representatives of ex-workers and ABM. The committee then set up some divisions within it. Those divisions are marketing, research and development, networking, finances, etc. depending on the needs. The most important things discussed here are the profit-sharing mechanism and collective ownership. Those two things reflect a criticism against capitalism system.

We have learned a lot from this strategy as we elaborate many things such as the collective ownership concept and how to meet the basic needs of ex-workers and their families. This practice has inspired us on how to explain and prove the viability of an alternative economy system benefitting people, as it emphasizes collective ownership and fair profit sharing. This kind of strategy then becomes our reference in anticipating mass layoffs and shutdown of production sites in the crisis. On a broader scope, we are formulating a strategy to challenge the State. The State must stop giving incentives to and subsidizing employers. It must support workers to take over production sites shut down by employers and change the market orientation to domestic self-fulfilling of needs.

Organizing state-owned enterprises (SOEs)’ workers against privatization

ABM as a national-level worker alliance has set up its platform against neoliberalism. The platform consists of several issues: those are: abolition of foreign debt, nationalization of mining and other natural resources, as they must be controlled by people, for the establishment of a a strong and independent national industry, eradication of corruption and the takeover of corruptly gained wealth for development programmes. This platform, then, is accepted by various unions in the manufacturing sector as most of them join ABM and also SOE unions as they are struggling against the government’s agenda to privatize SOEs. The government has set up a restructuring plan for PLN (the state-owned electricity company) by instructing the company to unbundle its power transmission and sell it to the private sector. Then the SOE unions alliance (Alkatras—Alliance Against Privatization) and ABM work together against this issue on the basis of a common platform that is industrial nationalization under the control of the people.

Besides this common platform, ABM also organizes solidarity actions supporting SOE unions. These solidarity actions then encouraged the formation of KSN (National Solidarity Group). This group unifies some alliances like ABM, Angkasa Pura I Union (Airport Service Worker Union) and PLN (the state-owned electricity company union). KSN works on many programmes such as writing pocket-sized books on anti-privatization. This group then encourages broader inter-sector solidarity actions. In the beginning, SOEs unions often felt alienated as they had been betrayed by the bureaucracy and political elites, but then working together with a radical workers’ alliance has opened their eyes about the importance of working together with unions from other sectors. In KSN, SOE unions also learn about the management of mass actions.

Networking with unions from other countries

Expanding networks in order to elaborate new initiatives in organizing workers is very crucial. In applying strategy of taking over production sites, ABM has pioneered a network with FRETECO (Revolutionary Front of Workers in Occupied and Co-Managed Factories), Venezuela. The network has worked on several issues like developing initiatives and strategies in occupying production sites and exchanging learning and propaganda materials. We should remember that Indonesia has the history of the Asia-Africa Conference in Bandung, 1955, a benchmark of a historical moment of unifying anti-imperialist countries. This historical benchmark can also be a start to unify workers in poor countries.

As this network is set up on the basis of solidarity among unions in poor countries, it is able to set up a communication process on the basis of interest of workers. This kind of network based on solidarity among unions will expand as it really acts as medium to share real strategy and practice of workers’ organizing.

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In dealing with the economic downturn, unions must be well equipped with strategies not only at the plant level but also at the level of challenging the State and existing modes of production. All experiences in the past should be accumulated in such a way that they become a precious learning process. If we have gotten used to listening to sorrowful stories on workers losing in a battle against capitalists, it is now time to prove that we are able to challenge them by improving our strategies and raising them to a higher level, initiating steps toward our platform against neoliberalism. The experience of setting up a committee to take over production site and collective ownership of means of production and radicalizing SOEs workers are inspiring story of struggle showing that workers are able to strike back and gain victory.