Extracting Labor from Its Owner
Private Employment Agencies and Labor Market Flexibility in Indonesia
Author: Benny Hari Juliawan
The Asian economic crisis in 1997 helped bring down Suharto’s authoritarian regime in 1998. At the same time it paved the way for more measures of economic liberalization. Some of these measures have taken the form of labor market liberalization, which aims to increase the labor market’s ability to adjust to changing economic conditions by clearing what are seen as burdensome regulations, or “rigidities” as they are known in economic parlance. An important instrument in this effort is the private employment agency, which the Manpower Act no. 13/2003 introduced in 2003. This article argues that the introduction of these agencies has created opportunities for various actors in society to take advantage of the less-protected workers in the uncertain waters of the post-Suharto labor regime. In the process, the nature of industrial relations has also been changed in a way that is more predatory than liberal. Ultimately the agencies help erode the hopes for a better life for workers and undermine the revival of labor political rights in Indonesia.