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Indonesian labor legislation in a comparative perspective : a study of six APEC countries

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  • Nayar,Reema

Abstract

The author compares Indonesian labor legislations with labor policies in five other APEC countries: Chile, the Republic of Korea, Malaysia, Mexico, and the United States. The report focuses on legislation affecting union regulation, minimum wages, nonwage compensation, and working conditions. Current legislation in Indonesia is a mixed bag of laws protecting workers'welfare but controlling organized labor. Indonesian laws restrict the ability of labor organizations to effectively represent workers to management at the plant level. In this, they are similar to Malaysian laws and, to a lesser extent, new Korean legislation. They provide a stark contrast to current legislation in Chile and the United States. But Indonesia legislation governing minimum wages, mandated nonwage benefits, and other labor standards, appear to be at least as generous as legislation in the five other countries. Indonesia is under pressure to ease restrictions on unions. The author suggests that allowing effective plant-level bargaining could give workers more of a voice at the workplace, but that improving industrial relations will require more than legislative changes. Careful changes in legislation and industrial relations could help unions play a more positive role, while downplaying labor's more negative role. The author cautions against centrally mandating labor standards, instead of letting workers and their employers negotiate them at local plants.

Suggested Citation

  • Nayar,Reema, 1996. "Indonesian labor legislation in a comparative perspective : a study of six APEC countries," Policy Research Working Paper Series 1673, The World Bank.
    • Handle: RePEc:wbk:wbrwps:1673
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    References listed on IDEAS

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    1. Panagides, Alexis & Patrinos, Harry Anthony & DEC, 1994. "Union - nonunion wage differentials in the developing world : a case study of Mexico," Policy Research Working Paper Series 1269, The World Bank.
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