Policy Brief: Improving Industrial Relations
The 5th Employment Policy Forum was held on August 12th at Gedung MPKP Kampus UI Salemba. The topic of the session was productivity and industrial relationship. The speakers were Mr. I Kadek Artha Dian Sutrisna (LPEM FEB UI) and Mr. Harijanto (PT Adis Dimension Footwear). The discussion was moderated by Mr. Fithra Faisal Hastidi (FEB UI).
Discussions in the forum brought up several key points. The first session discussed LPEM’s research on labor market flexibility, which found that Indonesia’s labor market suffers from a “double rigidity”, both in quantity of labor and wage rate. This double rigidity has a negative influence on innovation and export performance in the country. The second session, a case study of industrial relations from an employer’s perspective, identified five key elements: 1) being adaptable to the Indonesian context, e.g. laws and bureaucracy, low education and work ethic of the workers; 2) investing in worker skills; 3) clear communication between employer and employees; 4) providing for workers’ needs, such as transportation, primary health care, canteen, mini market, employees cooperatives; and 5) solidarity within the company. An open discussion session identified the contribution of two controversial policies in Indonesia’s labor market rigidity: high severance payments and the minimum wage law.
To address the identified issues, the Employment Policy Forum recommends the following: Improving industrial relations