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Indonesian workers up the ante

Labor unions in Indonesia are becoming more militant -- at times aided by the government -- in demanding higher salaries and in claiming their share of the national economic pie that has grown so rapidly these last few years. As is typical of many emerging market economies, Indonesia's growing prosperity has been accompanied by a widening income gap between the rich and poor, and unions blame this on the country's cheap labor policy.

A major industrial strike Tuesday in Medan, Indonesia's third-largest city on the island of Sumatra, paralyzed the local economy as unionists swept through factories to force workers to join the strike. They were joined by workers in the nearby Belawan port that virtually halted all operations. Anti-riot police were present but did little to prevent activists from forcing their way into factory grounds, all while employers and security guards watched on. The police did, however, ensure that the strikers' march through town was peaceful.

The workers in Medan are demanding that the provincial government of North Sumatra annul its decision to increase the regional minimum wage to Rp 1.375 million (U.S.$144) a month beginning in January, demanding instead a much larger increase to at least Rp 2.2 million. That's the same level that their counterparts in Jakarta, the Indonesian capital, have recently secured.

Employers remain reluctant to concede hefty pay increases, cautioning that Indonesia will price itself out of the global competition. So they're only agreeing to small hikes. But now, instead of fighting only with the unions, they also have to convince local governments, too. Many local administrations, which enjoy full autonomy from the central government, are manifestly siding with workers as they help mediate new minimum wage levels between unions and management representatives for 2013.

Jakarta has set the tone by awarding an unprecedented 44 percent increase. Jakarta Governor Joko Widodo, freshly elected in October, justified the increase by pointing out that the Rp 2.2 million minimum wage is the basic cost of living in the city. When the employers' representatives walked out of the negotiations, the union and the government decided to grant the large pay increase unilaterally. Employers have called this move illegal and are suing the Jakarta government in administrative court.

Increases in minimum wages in the past had been moderate, usually just large enough to keep up with the annual inflation rate. In most cases, however, the minimum wage falls short of the official calculation of the basic costs of living. Employers have argued for incremental increases each year to keep Indonesia attractive to foreign investors.

But with Indonesia's economy growing consistently at above six percent in the last three years, and the nation becoming visibly more prosperous, workers at the lowest rung of the ladder feel left out and are questioning the wisdom of the government's cheap labor policy.

The workers' growing militancy became apparent in October, when they organized a major strike to demand a complete ban on outsourcing practices. The massive nationwide protests turned ugly when -- for the first time -- some activists broke into factories and forced workers to join in their industrial action.

To make matters even worse for employers, the government caved in to the workers' demand and has since issued a ban on all outsourcing practices. Emboldened by their success, unions in various provinces are now demanding hefty increases in minimum wages for 2013.

Employers have not sat quietly in the face of the more militant workers. Members of the Association of Indonesian Employers (Apindo) have threatened to lockout the factories in the face of union vandalism. They claimed that the union activists in October forced their way into factories, where they harassed and intimidated their workers into joining the strikes. They have also threatened to shut down their factories altogether and to relocate them, either to other parts of Indonesia or to other Asian countries, if the police or the military fail to intervene in protect their property. In response to the 44 percent increase in the minimum wage in Jakarta, Apindo has warned that as many as 100,000 jobs in the textile industry alone are on the line if the government enforces the hikes.

But workers are undeterred, and appear determined to call Apindo's bluff.

How this confrontation between workers and employers -- with the government increasingly siding with the former -- will play out will only be known later in the year.  

Photo by ROMEO GACAD/AFP/GettyImages

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The continuing presidential soap opera in Venezuela

Venezuela: The land of soap operas, those weepy TV series that have been permeating Latin American broadcasting for years. And yet no TV studio has ever produced anything that can match the current political, social, and medical drama unfolding in both Caracas and Havana.

Last Saturday, Hugo Chávez returned to Venezuela from his latest stay in Cuba, looking healthy. But a few hours after landing, he shocked the nation by announcing that he will be going back to Havana for yet another cancer-related operation -- and that if something were to happen to him, the government must follow the constitution and hold elections. He concluded by imploring the people, "from the bottom of [his] heart," to vote for his vice-president, Nicolás Maduro (pictured above with President Obama).

It was the first time Chávez explicitly endorsed Maduro as his successor.

The president's followers are in disbelief. The next morning, thousands of people streamed into public squares and churches, holding prayer vigils and vowing to defend their beloved comandante presidente until the end.

The reaction in chavista op-ed pages has been more varied. One commentator in the widely-read pro-Chávez forum Aporrea criticized the selection of Maduro, claiming the vice-president is not radical enough and is a lover of the bourgeois lifestyle. Another called for taking Chávez's absence as an opportunity for further debate within chavista structures. The very same forum showed that chavistas are split, with some criticizing that Maduro is unpopular with the base supporters, while others argued that the will of the President should be respected and trusted in this emergency. One prominent academic close to the chavista movement acknowledged that nobody could match Chavez's unique leadership qualities, but that the faithful should cast doubts aside and assume the choice of Maduro as legitimate.

The wild card, of course, is the military. Although they recently (and alarmingly) pledged personal loyalty to Chávez and the Revolution in a press release, there was no mention in it of Maduro. How Maduro, a civilian, can navigate these waters remains an open question. His main rival within chavismo, National Assembly President Diosdado Cabello, is widely believed to have strong ties with the military, although some analysts believe the importance of these are over-estimated. They claim people make too much of Cabello's personal friendships with elements in the Armed Forces (Cabello met Chávez when both were active in the Armed Forces), all the while stressing that the military and civilian wings of chavismo work in lockstep.

For oppositionists, the choice of Maduro was widely expected. They see him as the strongest candidate in the weak field of Chávez substitutes. The constitution mandates a new election be called immediately after the death of the President, and the compressed schedule will likely mean a harshly negative campaign in which they will try to portray the vice-president in the worst possible light. However, if we judge by recent elections, any opposition candidate will have difficulties finding enough resources and air time to spread his or her message in a compressed election schedule. Chávez or no Chávez, the institutional advantages any chavista candidate enjoys remain intact. 

If they want to go negative, they won't have to strain themselves looking for research material. Rumors about Maduro's heavy-handedness -- namely interfering in sovereign nations' affairs -- and the alleged shady dealings of his partner Cilia Flores within the National Assembly are well documented. Maduro has been the visible figurehead of some of Hugo Chávez's most cringe-inducing foreign liaisons. He has traveled numerous times to Iran, supported Syria's Bashar al-Assad, and has been instrumental in Venezuela's strange infatuation with Belarus dictator Alexander Lukashenko.

But in the meantime, the opposition is showing restraint. They do not want to further divert attention from this Sunday's gubernatorial elections, in which many of their key players face tough fights against chavista candidates. Moreover, it would be callous for them to plan ahead while the President is still ailing.

But once the elections are passed, however, key opposition players will begin outlining their strategies. As soon as the voting is over, we should expect the likely candidates to begin convincing the opposition world that they can take on Maduro, and more importantly, play him tough.

While Chávez is now off limits due to his health, after this Sunday it will be a whole new ball game, and the opposition seems eager to fight. Maduro will have to simultaneously fend off doubts from chavistas and swipe away the opposition. With the ailing President absent from the airwaves and thus unable to support him, Maduro will be in the unusual position of having the center stage all to himself.

Photo by SAUL LOEB/AFP/Getty Images