BusinessWeek Magazine, December 15, 2003
Indonesia Faces "the Trigger of Revolution"
In an already troubled, divided country, the potential loss of 1 million garment jobs
could easily send it over the edge
As darkness and dust settle over the factory town of Bandung in the chilly hills of
West Java, the heart of Indonesia's garment and textile industry, 20-year-old Neng
Kartini strolls nonchalantly out of the Metro Garmin factory gates in her tight jeans
and T-shirt. She has small hands that make her valuable as a garment worker and
keeps her long hair tied back in a bun to prevent it from getting caught in sewing
machines. The short, stocky, single Javanese woman sprints across four lanes of
honking, rumbling buses and fabric-delivery trucks to a curbside roast-chicken stand
where she buys her dinner.
She's short of breath as she nibbles on a drumstick, not so much from dodging traffic
as from her eight-hour work day, during which she sewed 80 pairs of cuffs on
long-sleeve sport shirts for export to the U.S. Yet her foreman tells her she's too slow
and makes too many mistakes.
It weighs heavily on Kartini that another shirt factory down the road, Bina Citra II,
closed down earlier this year, putting 3,000 people out of work, and her own employer,
Metro, has just lost orders for long-sleeve dress shirts from Phillips-Van Heusen
(PVH). "I'm so tired," she confesses wearily, reaching deep into her jeans pocket and
paying for dinner with 12 cents from her $2.50 in daily take-home wages. "I'm afraid I'll
lose my job if I make a mistake, and I know I won't find another one."
PLENTY OF HEADACHES. Kartini has never heard of the Multi-Fiber Arrangement
(MFA), a 30-year-old global pact that gives 47 nations a share of the European and
U.S. markets for clothing and textiles, which is set to expire on January 1, 2005. But
she's not alone among the estimated 1 million Indonesians who work in garment
factories that export to the U.S. in worrying about her future. These factories are
shutting down every month as U.S. retailers increasingly order branded apparel from
China and other countries that offer lower costs and greater political stability.
With 42 million of Indonesia's estimated 140 million workers now unemployed, labor
relations are growing increasingly tense and sometimes volatile. The world's
fourth-largest country already has its headaches, with barely a trickle of foreign
investment coming in, and dozens of militants linked to al Qaeda on trial for bombings
in Bali and Jakarta. All this makes for a potent cocktail in a deeply troubled nation led
by a weak President into an election year, when unrest would have been expected
even under the best of circumstances.
If the U.S. phases out the MFA next year as planned, and if what's left of Indonesia's
export-oriented garment industry is wiped out as expected, then this Southeast Asian
archipelago could be in for a rough ride. "That will be the trigger of revolution," warns
Muchtar Pakpahan, a respected labor leader who was imprisoned by former President
Suharto and recently founded the Liberal Democratic Labor Party to run against
Megawati.
"MASSIVE" IMPACT. The pressure on Indonesia's garment industry is already heavy,
regardless of any decisions made in Washington, thanks to climbing costs and low
productivity. Chinese garment workers produce twice as many shirts per hour as their
Indonesian counterparts and they earn a little less, depending on which Chinese
province they're in. In Indonesia, minimum-wage increases are mandated by law. As a
result, more than 30 garment factories have closed this year, say industry executives
and labor leaders, including six plants in Bandung that employed more than 1,000
people each.
Workers are finding themselves suddenly unemployed under the worst of
circumstances, often without the severance pay that's now required by Indonesian
law. "I think the huge layoffs are going to come in 2004," says Rudy Porter, country
director of the American Center for International Labor Solidarity, the AFL-CIO's liaison
office in Jakarta. "The effect of the MFA will be massive."
Not surprisingly, garment workers are on edge, and opposition leaders are pushing
them to the brink. Dita Sari, a Marxist student leader who was jailed for several years
in the '90s, is one of several political party heads who lead demonstrations in front of
the presidential palace in Jakarta almost daily, haranguing a crowd of 4,000 to 5,000
students to rush the palace guards and "remove Megawati from office."
The students get stopped at the gate every time, without the guards firing a shot. But
that could change if unemployment rises steeply and opposition leaders find a use for
the retrenched workers. "They're only just warming up," says labor leader Pakpahan.
"NO VISION." The government isn't prepared to deal with large-scale unrest. Megawati
has no plans to woo the foreign investment required to create jobs, and the
government doesn't even keep statistics on plant closures or layoffs. "She is going to
continue with no strategy, no direction and no vision," says Pakpahan.
In a recent interview with BusinessWeek, Manpower Minister Jacob Nuwa Wea
played down the potential impact of the garment industry hollowing out. "It is definitely
a problem," admits Nuwa Wea. "But if a person is retrenched in one garment factory,
we will offer him or her to another garment factory."
The government will be even less prepared than usual to deal with massive labor
unrest next year, when the country will hold its first-ever direct presidential election.
Meanwhile, five Islamic parties are trying to unite against Megawati, and hardened
labor leaders like Pakpahan are jumping into the fray. Plus, the specter of Islamic
terrorist attacks looms as dozens of militants linked to al Qaeda stand trial for bomb
attacks on a strip of bars in Bali in October, 2002, and the J.W. Marriott hotel in
Jakarta in August.
HUSBANDS' FURY. The question is: Why hasn't Indonesia boiled over yet? One
reason is that the massive single wave of layoffs -- which is what the MFA phase-out
could bring -- hasn't come yet. Another is that about 90% of Indonesia's garment
workers are young women, and the few women who have emerged as labor leaders
have paid a steep price. Dita Sari, founder of the People's Democratic Party, was
imprisoned by Suharto as a Marxist in 1997, and Marsinah, who led a strike at a
watch factory in Surabaya, was sexually tortured to death in 1993.
"The boss hires women because they're quiet," says Enung Jamilah, a 21-year-old
woman who presses Gap (GPS ) and Banana Republic trousers all day at the Fit-U
garment factory in Bandung. "They don't protest."
But it's not the garment workers factory managers are afraid of. Rather, it's their
husbands, who are generally unemployed and idle at home, and might look for trouble
if it came their way. "Their husbands will come to the door for their wives' paychecks,"
says Sanjeev Wadwha, senior vice-president of Busana Apparel Group, which
manufactures long-sleeve dress shirts for Van Heusen and is now studying plans to
close two factories and lay off 8,000 workers. "The roads will be filled."
By Michael Shari in Bandung, Indonesia
Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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