Compliance with Labour Law and Minimum Wages in the garment industry in Indonesia

Abstract

The garment industry is an important sector in Indonesia, because it provides jobs to 1.3 million persons (2014 labour force statistics). When including informal labour this number doubles almost to 2.4 million (2016 estimates). Most likely a considerable part of these workers produces for the domestic market and is not involved in the export industry. The value of Indonesian garment exports for 2016 was USD 7474 million.

The Gajimu DecentWorkCheck Survey of WageIndicator is a survey that allows workers to test whether their jobs comply with the national Labour Law and with the applicable Minimum Wage rates. For 46 topics this report presents the findings of the DecentWork-Check Survey in the garment, textile and footwear industry in Indonesia. The survey is conducted as part of the gajimu/garmen project. This project aims to improve compliance with the Labour Law and Minimum Wage setting and to confirm so by means of collective bargaining agreements. The fieldwork for the survey started 16 July 2017, and this report uses the data until 6 August 2018, but the survey continues to date. The dataset holds information of 3,194 interviews with workers, including 30 HR officers.

More than seven in ten survey respondents work in the garment industry, and another two in ten work in the textile industry. More than one third are based in Western Java, and another third in Banten. Six in ten are female, and half of all females are in their twenties, whereas the males are mostly in their thirties. The workers are working for 125 factories and these employ in total almost 250,000 workers, with an average of 2,016 workers per factory.

Compliance with fair treatment topics, such as no discrimination, no sexual harassment, no child labour, no hazardous work for adolescents, is most frequently reported: 98 percent of the workers confirm so. Compliance with working time regulations is also considerably high with 92 percent of workers reporting that working hours are not excessive, that a paid annual leave and a weekly rest day is in accordance with the Law, and that a premium is paid for working on a rest day or a holiday. Compliance in the Minimum Wage cluster reveals that 86 percent of the workers is paid at least the relevant minimum wage, and that payments are almost always on time. Compliance in the health and safety cluster is reported by 87 percent of the workers. In this cluster, the rate for provision of fire extinguisher is highest and for provision of on-site medical facilities is lowest. Compliance in the cluster of maternity regulations is reported by 85 percent of the workers. The provision of 13 weeks of maternity leave is rated highest and that of nursing breaks for mothers lowest. Compliance in the social security cluster is reported by 92 percent of the workers, and within this cluster occupational injury benefits are reported most frequently and old age pension rights least frequently. Compliance in the employment contract cluster is reported by 78 percent of the workers, and this low rate is particularly due to employers hiring contract workers to perform jobs where permanent workers are required. Finally, the lowest compliance rate is in the cluster of the right to organise with 75 percent of workers reporting so. The vast majority of the employers allow workers to join a trade union, but a minority of employers allow workers to hold a strike.

When compliance rates drop below 90%, factories, (local) governments, trade unions, and NGO’s should be challenged to undertake action for improving compliance. In the garment industry in Indonesia, specifically the low compliance with the Minimum Wages Rates and with the possibilities to hold a strike need attention.

For the majority of the topics, no significant gender differences are noticed. Compliance rates with a few topics in the maternity and health and safety cluster are more often reported by women, whereas compliance rates with a few topics in the employment contract and minimum wage cluster are more often reported by men.

Overall, the DecentWorkCheck Survey has shown that it is a useful instrument to measure compliance and the results have shown that compliance rates are decent.