INDONESIA

Baseline Report: Worker Perspectives

from the Factory and Beyond

July 2012

Copyright © International Labour Organization (ILO) and International Finance Corporation (IFC) (2012) First published (2012) Publications of the ILO enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to the ILO, acting on behalf of both organisations: ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: pubdroit@ilo.org. The IFC and ILO welcome such applications.

Libraries, institutions and other users registered with reproduction rights organisations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. ILO Cataloguing in Publication Data Better work Indonesia: garment industry baseline report : worker perspectives from the factory and beyond / International Labour Office. - Geneva: ILO, 2012 Better Work discussion paper, ISSN 2227-9539, 2227-9547 (web pdf) International Labour Office clothing industry / clothing worker / working conditions / occupational health / family / Indonesia 08.09.3 The designations employed in this, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the IFC or ILO concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers.

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Copyright © International Labour Organization (ILO) and International Finance Corporation (IFC) (2012) First published (2012)

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Table of Contents Foreword ...................................................................................................................................................................................iii Executive Summary .................................................................................................................................................................. iv Section 1: Introduction............................................................................................................................................................... 1

2.1 Basic demographics of the garment industry .................................................................................................................. 2 2.2 Family and household composition ................................................................................................................................. 4

Section 3: At the workplace ....................................................................................................................................................... 5 3.1 Occupational safety and health (OSH) ............................................................................................................................ 5 3.2 Hours and rest days ......................................................................................................................................................... 9 3.3 Compensation ............................................................................................................................................................... 11 3.4 Workplace systems and relations .................................................................................................................................. 14 3.5 Training opportunities ................................................................................................................................................... 18 3.6 Respect and welfare ...................................................................................................................................................... 19

Section 4: Beyond the workplace............................................................................................................................................. 23 4.1 Children of workers ...................................................................................................................................................... 23 4.2 Financial independence ................................................................................................................................................. 23 4.3 Life satisfaction ............................................................................................................................................................. 24 4.4 Communication ............................................................................................................................................................. 25

Section 5: Conclusion .............................................................................................................................................................. 28 References ............................................................................................................................................................................... 30

List of Tables Table 1: Age of workers in factories .......................................................................................................................................... 2 Table 2: Level of education among factory workers .................................................................................................................. 2 Table 3: Employment history of factory workers ...................................................................................................................... 3 Table 4: Breakdown of workers’ roles within their factory ....................................................................................................... 3 Table 5: Level of concern among workers regarding temperature control in factories .............................................................. 6 Table 6: Non-medical facilities available at factories, according to workers ............................................................................. 6 Table 7: Level of concern among factory workers regarding occupational safety ..................................................................... 7 Table 8: Frequency with which workers experience injury at their factory ............................................................................... 7 Table 9: Level of concern among factory workers over working hours ................................................................................... 10 Table 10: Barriers to promotion in factories, as perceived by workers .................................................................................... 14 Table 11: Types of contract on which factory workers are employed ..................................................................................... 16 Table 12: Induction training received by factory workers ....................................................................................................... 18 Table 13: Training received by factory workers within past six months.................................................................................. 19 Table 14: Workers’ concerns regarding sexual harassment and verbal and physical abuse in factories .................................. 19 Table 15: Fairness and respect shown to workers by supervisors in factories, as perceived by workers ................................. 21 Table 16: Causes of disciplinary action in factories, as perceived by workers ........................................................................ 21 Table 17: Types of disciplinary action taken by supervisors in factories, as reported by workers ........................................... 21 Table 18: Adherence to factory rules by supervisors, as perceived by factory workers ........................................................... 22 Table 19: Education among dependents of factory workers .................................................................................................... 23 Table 20: Remittances to family members by factory workers ................................................................................................ 23 Table 21: Financial help received by factory workers from their families ............................................................................... 24 Table 22: Interest expressed by factory workers in receiving best practice information .......................................................... 25 Table 23: Mobile phone usage by factory workers .................................................................................................................. 26 Table 24: Daily radio usage by factory workers ...................................................................................................................... 26 Table 25: Internet usage by factory workers ............................................................................................................................ 26 Table 26: Usage of social media among factory workers ........................................................................................................ 27

List of Figures Figure 1: Nature and frequency of ailments affecting factory workers ...................................................................................... 5 Figure 2: Health services available at factories, against use of such services by workers ......................................................... 8 Figure 3: Procedure for signing overtime agreements in factories, as reported by workers ..................................................... 11 Figure 4: Concern among factory workers regarding pay practices ......................................................................................... 11 Figure 5: Reasons for the award of bonuses, as reported by factory workers .......................................................................... 13 Figure 6: Information included on pay slips, as reported by factory workers .......................................................................... 14 Figure 7: Number of non-permanent and permanent workers at Better Work factories .......................................................... 17 Figure 8: Symptoms of anxiety and distress experienced by factory workers ......................................................................... 25

iii

Foreword This report is one of a series of papers presenting data from worker surveys conducted as part of a rigorous impact assessment of the Better Work programme. The data presented here were collected as the Better Work programme was starting up in Indonesia. It forms the baseline against which the impact of the Indonesia programme will be measured in future years. Better Work strives to have a significant impact on the lives of workers, the business practices of firms, and the social, human and economic development of countries. Measuring this impact in a credible way requires special effort and particular tools. In 2007, Better Work selected a multidisciplinary team of researchers to design and implement the impact assessment framework. The team, led by Professor Drusilla Brown of Tufts University (United States), comprises six economists and statisticians, three psychologists with expertise in programme evaluation and human development, and two scholars with expertise in workplace innovation, organization and occupational safety and health. As of May 2012, surveys were under way in Haiti, Indonesia, Jordan, Nicaragua and Vietnam. In each country, data collection is carried out in collaboration with a local research partner. The survey instruments, as well as the training for local research partners, have been developed by the team at Tufts University. For each factory, the baseline data include findings drawn from computer-based surveys conducted with: (i) four management staff, such as the General Manager, Chief Financial Officer, Production Manager, Factory Manager, Human Resource Manager and Industrial Engineer; and (ii) 30 workers randomly selected from the factory’s roster of production employees. The worker surveys are implemented using Audio Computer Assisted Self Interview (ACASI) methodology, whereby workers responded to audio-narrated questions in the local language using a minicomputer or tablet attached to earphones. The management surveys are conducted using a Computer Assisted Personal Interview (CAPI) without audio assistance. Using this innovative, highly confidential method to collect primary data, in accordance with protocols governing the surveys’ proper implementation, allows workers and managers to disclose sensitive information without fear of repercussion or retaliation. This report was written by Anika Huq. It presents a baseline and does not therefore demonstrate the impact of Better Work’s interventions. The survey data shed an important light on workers’ lives and their perception of their working conditions. They highlight some of the opportunities and challenges of working in the global garment industry. In addition to establishing a benchmark for measuring the long-term effect of the Better Work programme, the data will be used to inform the programme about any worker needs and priorities that might be addressed immediately in service delivery. As every country in which Better Work operates has a unique institutional and cultural context, this report also presents additional desk-based research aimed at providing the background necessary to interpret the survey data effectively.

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Executive Summary This report synthesizes worker survey results with country, regional and industry-specific trends. The purpose of this is to identify how Better Work Indonesia could affect workers’ lives inside and outside of the factory, and devise programme innovations accordingly. Notable findings are outlined below. Demographics and family and household composition Workers in the sample were fairly well-educated. Around 81 per cent of workers had completed junior high and/or high school. A considerable percentage also had work experience. Some 45 per cent of the sample reported that they had had at least one other Indonesian garment industry job. Some 65 per cent had been employed full time for over one year and some 25 per cent had worked full time 7 years or longer. For 28.8 per cent of workers, their current job was either their first job or they had previously been employed in home production (11.1 per cent) or household enterprise (3.9 per cent). However, a considerable minority of workers reported having no work experience (39.9 per cent). A significant proportion of workers were parents: 38.3 per cent reported having sons, and 38.6 per cent daughters. At the workplace Occupational safety and health (OSH) Workers reported many concerns with health issues. Thirst emerged as a serious issue with 53.5 per cent of workers reporting severe thirst often or every day. This may be connected with the high level of concern regarding excessive heat in the factories, reported by 47.6 per cent of workers as a problem. Significant percentages of workers experienced the following symptoms occasionally, often or every day: severe fatigue (42.1 per cent); stomach pain (30.6 per cent); dizziness (41.5 per cent); and head, back, or neck ache (46 per cent). The level of concern over workplace hazards was also high. Around 59 per cent of workers reported concerns over dangerous equipment and injuries, and around 73 per cent over accidents and injuries. A significant percentage of workers (26 per cent) reported that they had been injured at least once. Many workers were also concerned with their working environment, including dusty or polluted air, bad chemical smells and noise levels. Hours and rest days A significant minority of workers expressed concerns regarding overtime. Some 21 per cent of workers believed that overtime represented a concern for workers in the factory, and some 44 per cent of workers were concerned specifically about working on Sundays. There does, however, seem to be a discrepancy between the working hours reported and the percentage of workers eating dinner in the factory, indicating that workers may not be stopping work when they claim to be. A significant minority of workers also reported working at weekends. The research also uncovered irregularities in relation to the signing of the written overtime agreement. Though in principle the agreement should be signed by the supervisor and the worker, proper procedure occurred in only 17.6 per cent of cases.

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Compensation Workers exhibited great concern regarding wages. Their concerns included payment of wages (71.5 per cent), excessive pay deductions (84.1 per cent), in-kind compensation (45.6 per cent), low wages (83.2 per cent), confusion about the piece-rate (58.3 per cent) and broken punch clocks (76.8 per cent). Workers consistently raised such concerns with management staff and trade union representatives. Resigning and striking were much less common responses. The baseline data collected revealed a unique use of pay incentives. Some 79 per cent of workers reported that none of their pay was determined by piece-rate. Pay incentives related to work effort were based instead on whether the worker or production line completed the production target before the end of the work day. In this regard, 20.9 per cent of respondents reported that they always received a bonus; an additional 23.1 per cent reported that they sometimes received a bonus when the daily production target was filled. Pay slips, a key component of human resources (HR) management, contained significant information such as the date (75.4 per cent of respondents), ID number (68.0 per cent), regular hours (65.7 per cent), overtime hours (71.0 per cent) and wage rate (69.5 per cent). Information about union dues (22.4 per cent), bonuses (31.3 per cent) and deductions (15.0 per cent) was included less frequently. Very few workers reported that they received information about their piece-rate (3.6 per cent) or pieces completed (0.4 per cent). Workplace systems and relations The baseline data indicated that the garment factories surveyed exhibited rigid factory structures, seemingly vigorous exercise of union membership and collective bargaining, and a high percentage of non-permanent contracted workers. When workers were asked perceived reasons why they were not promoted, a large fraction (38.1 per cent) considered that there were no barriers to promotion. The single biggest obstacle, from their perspective, was lack of skill (19.7 per cent) followed by lack of education (7.1 per cent). There was very little evidence that discrimination, of various forms, was a significant cause of failure to advance professionally. Rights to freedom of association and collective bargaining appeared to be vigorously exercised. Across all categories of questions, workers reported that they often raised concerns with their trade union representatives. Around 65 per cent of workers reported being a trade union member and a slight majority, 51 per cent, reported being represented by a collective bargaining agreement. Most workers (80.1 per cent) reported signing a contract, and 97.9 per cent of those workers reported that the contract was in Bahasa Indonesia, a language they could understand. Most workers (69.7 per cent), however, were employed on non-permanent contracts. Training Workers received training on a range of different topics. A very small percentage, 6.4 per cent, reported receiving no induction training at all. The largest percentage of workers received training on health and safety issues (35.4 per cent). Between 17.9 and 29.2 per cent of workers reported that they had received training on grievance procedures, benefits, skills upgrading, labour law, pay procedures, collective bargaining, safe machine operation, overtime practices, work hours, worker rights, or basic skills. Between 11.3 and 13.6 per cent reported having received training within the last six months on new operations, worker rights, collective bargaining, health and safety, safe machine operation and new skills.

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Training on fines was the topic reported by the smallest percentage of workers (2.3 per cent). A low percentage (13.4 per cent) reported that they had received no training in the past six months. Respect and welfare An alarmingly high percentage (85.2 per cent) of workers reported concerns over sexual harassment. In addition, 79.3 per cent were concerned about verbal abuse such as shouting or vulgar language, and 87.4 per cent with physical abuse such as striking or pushing. Typically, around 30 per cent of workers discussed their concerns with a supervisor or manager and another 30 per cent raised concerns with their trade union representative. Another 10 per cent of workers had considered resigning. Workers also reported that their supervisors corrected them in a disrespectful way. Only 59.4 per cent of workers felt that their supervisor corrected a mistake with fairness and respect. Meanwhile, 32.4 per cent reported that respectful supervision occurred only sometimes, and another 8.2 per cent felt that such respectful corrections occured rarely. When asked to cite perceived reasons for such disrespect, the largest percentage of workers (36.7 per cent) responded “none.” Beyond the workplace Children of workers A significant minority of workers were also parents, with 38.3 per cent reporting having one or more sons and 38.6 per cent one or more daughters. Most school-aged children of workers in this study were in school. However, 3.2 per cent of sons and 3.4 per cent of daughters were not in school for financial reasons. Financial independence Most workers (82.5 per cent) reported that they contributed to their family’s wealth either regularly or occasionally. Despite this, 49 per cent of these workers also needed help from family members. Life satisfaction Few workers exhibited symptoms of depression most of the time. However, many workers reported symptoms of depression some of the time, such as feeling restless (29.1 per cent), fearful (15.8 per cent), sad (22.0 per cent), tearful (15.0 per cent) and hopeless about the future (20.4 per cent). Communication A large majority of workers (83.6 per cent) expressed strong interest in receiving information about OSH, wages and other topics. The most common communication device used was mobile phone, with 90.8 per cent of workers reporting using these. Television and radio were also commonly used: 77.4 per cent of respondents reported watching television daily, and 50.3 per cent of workers reported listening to the radio daily. Regarding online communication, 38.6 per cent of workers reported using the internet and 29.8 per cent were on Facebook. Conclusion Given the myriad worker issues revealed by the baseline data, various further avenues of research are recommended. Worker concerns with occupational safety and health, compensation and work hours will be addressed through Better Work Indonesia assessments and advisory work. In addition, it is suggested that further research be undertaken into how wage rates, which are set locally by district or province, affect workers’ lives. Consideration should also be given as to how better HR management practices in garment factories could make wage practices clearer to workers.

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Although this study suggests that collective bargaining rights are vigorously exercised in the factories, it would also be interesting to study in more detail what action union officials take when faced with common worker complaints. With concern to respect and welfare, an alarming number of workers reported concerns over sexual harassment and verbal and physical abuse. The overwhelming majority of workers, however, reported that they believed supervisors were fair or better at following the factory rules. It seems therefore, that workers believe that it is acceptable under the factory rules to be treated this way. Accordingly, workers should be trained to identify inappropriate workplace behaviour, while managers should be trained to understand sexual harassment and its adverse impact. In addition, employers should be advised to develop policies and procedures to prevent, identify and deal with sexual harassment. Finally, since a considerable majority of workers reported that they had children, and that workers reported that they were not members of unions, were not being promoted, and were clocking in long hours, a study into quality childcare options for the children of workers is recommended. This would allow workers to become more involved in unions and other work-related activities.

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Section 1: Introduction The Better Work Indonesia programme, a partnership between the International Labour Organization (ILO) and the International Finance Corporation (IFC) and funded by Australian Aid, was launched in 2011. The programme aims to improve compliance with labour standards and working conditions in the garment industry as regulated by the ILO Declaration on Fundamental Principles and Rights at Work and its follow-up and Indonesian labour law, while at the same time promoting competitiveness at the enterprise level. To establish a sustainable service, Better Work Indonesia works with key stakeholders including the Indonesian Ministry of Manpower and Transmigration (MoMT), the Indonesian Employers Association (APINDO), and the four main union federations of the garment industry: Garteks, TSK Kalibata, TSK Pasar Minggu and Serikat Pekerja Nasional (SPN), as well as with international buyers sourcing from Indonesia. In addition to offering a growing range of assessment, advisory and training services to participating factories, Better Work is conducting an impact assessment to study how it improves workers’ lives inside and outside the factory, and the business case for compliance with labour standards. The ultimate objective of the impact assessment is to support continuous improvement in programme services. To achieve this, Better Work Indonesia is partnering with Tufts University (United States), University of Indonesia and University Gadjah Mada to collect and analyse a first round of data as a baseline for future impact assessment research. Surveys were conducted in 42 factories between September 2011 and February 2012. A total of 918 workers participated in the surveys using the Audio Computer Assisted Self Interview (ACASI) procedure, whereby workers responded to audio-narrated questions adapted to the local language, using a tablet. These surveys covered a broad range of topics in categories including occupational safety and health, workplace systems and relations, compensation, and worker health and well-being. The purpose of this report is to situate survey results in country, regional and industry-specific contexts. The impact of the program is being assessed based on measures of: (i) innovations in human resource management; (ii) improvements in working conditions; (iii) factory productivity; (iv) product quality and complexity; (v) supply chain position; (vi) worker perceptions of workplace satisfaction; (vii) compensation; (viii) physical and mental occupational health; (ix) worker and family physical and mental health status and access to health care; (x) educational attainment of siblings and children; and (xi) human rights related to forced labour, human trafficking, non-discrimination, child labour, freedom of association and collective bargaining.

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Section 2: Demographics This section outlines basic demographics of the workforce participating in this study, as well as their family and household characteristics. 2.1 Basic demographics of the garment industry The workforce surveyed was 92.2 per cent female. This overwhelming proportion of female workers reflected the gender composition commonly observed in Indonesian garment factories where, as of 2008, 78 per cent of a total 500,000 workers were women.1 Most workers were also young; 80.3 per cent of workers were aged 21–35. Table 1: Age of workers in factories Age range of workers in years Worker count % 18–20 89 9.7 21–25 250 27.2 26–30 237 25.8 31–35 251 27.3 36–40 70 7.6 40+ 21 2.3

Most workers (81.6 per cent) lived with their families, 14.9 per cent with friends or co-workers and the remaining 3.5 per cent in a factory dormitory. Workers in the sample were fairly well-educated, with 81.1 per cent of workers having completed junior high and/or high school. Only a tiny fraction (1.0 per cent) had either no formal education or had attended university. Table 2: Level of education among factory workers Level of education Worker count % No formal education 3 0.3 Elementary school 165 18 Junior High school 402 43.8 High School 342 37.3 University 6 0.7

These data show that workers surveyed possessed a high level of education compared to the Indonesian workforce as a whole. Data from the United Nations Development Programme (UNDP)’s human development index of the Indonesian population aged 25 or older indicates that 24.2 per cent of women and 31.1 per cent of men have at least a secondary level of education. Accordingly, Indonesia fares poorly compared to its regional peers on the UNDP Human Development Report’s Education Index.2 The country ranks lower than Malaysia, the Philippines and Singapore, as well as the average rank of East Asian and Pacific countries.3 1 Kuncoro (2011) 2 This index is a weighted average of the adult literacy rate and the combined primary, secondary and tertiary gross enrolment ratios. 3 United Nations Human Development Report (2011)

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Another indication of above-average level of human capital in factories participating in this study is the finding that a considerable percentage of workers had prior work experience (see Table 3). Table 3: Employment history of factory workers Workers’ previous workplace Worker count % Another garment factory in Indonesia 416 45.8 Another garment factory outside Indonesia 15 1.7 Another business in Indonesia 34 3.7 Another business outside Indonesia 1 0.1 Family farm 10 1.1 Household enterprise (not a farm) 25 2.8 Doing chores at home 101 11.1 None, this is my first job 262 28.8 None 45 5

Workers’ relatively high level of education and work experience could be explained by advances in human resource (HR) management among garment factories in this study. As shown in the following sections of the study, such as the extensive use of pay incentives in Section 3.3, HR management practices at garment factories in Indonesia include multi-dimensional pay. Indeed, a US Agency for International Development (USAID) study of HR management practices at garment, footwear and furniture factories in Indonesia showed that a number of buyers required their suppliers to formalize their recruitment methods by maintaining personnel records and performing medical and document checks, such as age verification.4 It is possible that factories intentionally hired educated and experienced workers believing that they were more likely to respond to training. This reflects efforts to create more strategic and value-added HR systems. As expected given the transient nature of production-level factory work, the length of time a typical worker spent working at their current workplace was one year or less (40.4 per cent) or two years or less (50.6 per cent). Table 4 provides a breakdown of workers’ roles inside the factories. Table 4: Breakdown of workers’ roles within their factory Worker’s role within factory Worker count % Sewing operator 468 51.4 Cutter 55 6 Spreader 4 0.4 Checker 19 2.1 Mechanic 3 0.3 Packer 34 3.7 Quality Control 88 9.7 Supervisor 6 0.7 Helper 88 9.7 Other 145 15.9

4 Lake (2008)

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2.2 Family and household composition A significant percentage of workers were parents: 38.3 per cent reported having at least one son and 38.6 at least one daughter. Conversely, a different study of female labour force participation in Indonesia found that women often worked at garment factories during the period between graduating from school and getting married, and did not regard this work as part of a life-long career. Many left the industry after getting married and having children, owing to household duties and insufficient support for childcare and household management.5

5 Chatani (2012)

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Section 3: At the workplace This section outlines workers’ perception of their lives within the factory, including their concerns regarding OSH, hours, compensation, workplace systems, training, and respect and welfare. 3.1 Occupational safety and health (OSH) OSH issues are of significant concern for all Indonesian work sectors, as indicated by the number of violations of Indonesia’s Keselamatan dan Kesehatan Kerja (K3), or OSH, regulations uncovered by the Indonesian MoMT. Minister Muhaimin Iskandar cited that in 2011, 3,848 companies violated the K3 regulations, 7,468 companies received verbal warnings and 1,472 companies received strong warning letters. In addition, there is a high incidence of work accidents in a wide variety of Indonesian workplaces. There were 98,711 work accidents recorded in 2010 and 48,515 in the first six months of 2011. These primarily involved being knocked, slashed, and cut by sharp objects; and falls involving engines, lifting equipment and hand tools. Out of 4,057 companies, 3,517 were given warning letters by inspectors to improve compliance. In accordance with these statistics for Indonesian manufacturing industries as a whole, worrying safety concerns emerged in garment factories surveyed in this baseline study. Such concerns related to thirst, heat, chemicals, pollution and workplace hazards, among other issues. Severe thirst was common: 53.5 per cent of workers reported experiencing severe thirst often or every day. Interestingly, adequate water supply was not cited as a concern for workers; only 17.3 per cent of respondents reported some degree of dissatisfaction regarding the quality and availability of drinking water in the factory. Figure 1: Nature and frequency of ailments affecting factory workers

Workers may have experienced thirst because they did not want to fall behind on reaching their production quota and were therefore reluctant to stop work to drink water. They might also have been unaware of the importance of proper hydration. It is also possible that heat was a significant contributor to workers’ thirst. Only about half (52.4 per cent) of respondents reported that temperature control in their factory was not a concern. Concerns

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Stomach Pain Dizziness Head, Back NeckAche

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were sufficiently intense that 23.6 per cent of workers had complained to their supervisor or manager about the issue, 9.4 per cent had raised it with their trade union representative, and another 1.4 per cent had considered resigning or striking over it. Table 5: Level of concern among workers regarding temperature control in factories Level of worker concern over excessive heat Worker count % Not a concern 251 52.4 Discussed with co-workers 63 13.2 Discussed w/ supervisor or manager 113 23.6 Discussed with trade union representative 45 9.4 Considered resigning 4 0.8 Threatened a strike 1 0.2 Mounted a strike 2 0.4

Reasons behind unbearable heat in factories could include poor ventilation owing to inadequate heat extraction systems and air conditioning on the work floor. There are, however, guidelines issued by the MoMT against excessive heat in the workplace. According to these guidelines, the “hold” temperature should be comfortable, and employers are obliged to prevent and control the extent of rising or spreading heat or humidity. Factory temperature should be capped to 30 degrees centigrade for light work, 26.7 for average work, and 25 for heavy work.6 The workplace should also have sufficient artificial and/or natural ventilation.7 It is possible that some concerns over health and safety could be attributed to a lack of facilities such as toilets and water in some factories. If a worker were unable to use the toilet or drink water as necessary, this could lead to stomach aches, headaches and other ailments. Table 6: Non-medical facilities available at factories, according to workers Type of facility available Worker count % Eating area 517 56.3 Food 216 23.5 Water 580 63.2 Dormitory 73 8 Toilet 571 62.2

Workers were generally satisfied with facilities at their factory. Nearly half (47.2 per cent) considered food in the canteen as fair or better. Most workers (71.9 per cent) were satisfied or very satisfied with the toilet facilities, and 82.7 per cent were satisfied or very satisfied with the quality and availability of drinking water. However, workers also expressed a high level of concern over workplace hazards and accidents, as shown in Table 7.

6 Work Safety Act No. 1 of 1970, Art. 3; Minister of Manpower Decree No.KEP.51/MEN/1999, Appendix I; Minister of Health Decree No.1405/MENKES/SK/XI/2002, Appendix 2, Section III. 7 Work Safety Act No.1 of 1970, Art. 3; Minister of Manpower Regulation No. 7 of 1964, Art. 5(4); Minister of Health Decree No. 1405/MENKES/SK/XI/2002,Appendix 2. Appendix 2.

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Table 7: Level of concern among factory workers regarding occupational safety Level of concern Dangerous equipment or

machinery Accidents or injuries

Worker count

% Worker count

%

Not a concern 40 40.8 125 27.3 Discussed with co-workers 7 7.1 54 11.8 Discussed with supervisor or manager 39 39.8 194 42.4 Discussed with trade union representative 9 9.2 79 17.2 Considered resigning 2 2 5 1.1 Threatened a strike – – 1 0.2 Mounted a strike 1 1 – – – = nil Workplace hazards had resulted in injury for a significant number of workers, with 26 per cent of workers reporting that they had been injured at least once (see Table 8). Table 8: Frequency with which workers experience injury at their factory Frequency with which workers experience injury Worker count % Never 667 73.6 Rarely 107 11.8 Occasionally 129 14.2 Often 3 0.3

Almost all the workers (97.1 per cent) reported that a clinic was available at the workplace. However, the range of health services available in these factories varied. Many workers (37.1–47.6 per cent), reported that they had access to common services such as treatment for workplace injury, headaches, fatigue, general illness and regular check-ups, but fewer workers cited other types of care as available. In total, 239 workers reported having been injured, and 205 workers reported having received care for an injury in their factory clinic. It seems, therefore, that most injured workers were treated in factory clinics. On the basis of Figure 2, it appears that, for 7 out of 9 health issues, the health services available in factory clinics exceeded the care that was actually received for those issues. It would seem therefore that workers are not using their clinics to the full, and it would be interesting to know why that is. This should be studied further in future baseline data research. It might be because workers do not have time to seek help for medical issues; there might be a cultural factor involved; or it might be that workers mistakenly believe that certain services are available to them when in fact they are not.

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Figure 2: Health services available at factories, against use of such services by workers

*As reported by workers.

Workers were also concerned over their working environment: 64.3 per cent reported concerns with dusty or polluted air and 68.9 per cent with bad chemical smells. These concerns might be linked to the lack of proper ventilation in some factories, as indicated by the high level of concern regarding excessive heat. In addition, in certain cases, workers who are given protective masks may neglect to wear them owing to high temperatures. Another survey on the garment sector in Indonesia found that although workers commonly received personal protective equipment (PPE) in the form of masks, earmuffs, and protective shoes, they often did not use this equipment; it made them feel uncomfortable; was out of date; and/or they did not know how to use it.8 A low level of noise is also an important aspect of a comfortable work environment. The majority of workers indicated that they were concerned about noise levels in their factory. Nearly half (45.1 per cent) were bothered by noise at work sometimes or a lot, and 23.3 per cent reported that the noise level was sufficiently loud that they had to shout to be heard by someone nearby, sometimes or often. Better Work Indonesia, stakeholders, and buyers should pay close attention to PT JAMSOSTEK, the social security insurance scheme under which all workers and their families must be covered and under which workers are entitled to monetary compensation as a substitution for lost earnings as a result of accident, illness, pregnancy, old age and death.9 In the future, baseline data should also be collected on JAMSOSTEK and its pervasiveness throughout the Indonesian garment worker population, as this is an important part of dealing with work-related stress and injury. In addition, it is worth noting that workers on both permanent and non-permanent contracts are entitled to JAMSOSTEK benefits, according to recent amendments to the Indonesian constitution. Better Work Indonesia and stakeholders should therefore monitor the contract status of workers and whether or not they are receiving JAMSOSTEK benefits for which they are eligible. A case study examining JAMSOSTEK benefits, however, found that some Indonesian garment factories subscribe to other

8 Local Initiative for OSH Network (LION) Indonesia (2010) 9 Manpower Act No. 13 of 2004, Art. 99–100; Labour Social Security Act 3 of 1992, Art. 1, 3, 17–19, 22; Minister of Manpower Regulation No. PER-01/MEN/1998, Art. 1–13; MoMT Cirular No. SE.356/MEN/PHI-PJSK/IX/2008; Director-General of Manpower Management and Monitoring Decision No. KEP.338/BW/98.

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health care systems rather than the national healthcare mandate. The management of the factories concerned believed that private health care schemes were more efficient, and that international buyers preferred these schemes for their quality services. Medical benefits were the same, but dependents could not receive benefits if they lived in remote areas. Some private schemes also used a pay-per-use employee reimbursement system, under which the employer reimburses worker or family members for medical care. There are advantages and disadvantages for workers depending on the type of scheme, and further research should be done on health care systems, and the extent to which choice of health care system could affect the impact of injuries and other ailments on workers’ lives.10 3.2 Hours and rest days Baseline data collected regarding hours and rest days showed that many workers might have worked more hours than the local standard of 40 weekly working hours.11 On average, 80 per cent of workers reported that on Monday to Friday, they began work between 7 a.m. and 7.30 a.m., and 90 per cent reported that they finished work some time between 3.30 and 6 p.m. However, an average of 2.7 per cent of workers reported that between Monday and Thursday they did not leave the factory until 8 p.m. A significant proportion of workers were found to work on Saturdays (36.8 per cent), with 33.9 per cent of workers reporting that they began work between 7 a.m. and 8 a.m. and 28.4 per cent of workers that they left work between 12 p.m. and 2 p.m. However, if workers were truly leaving the factory by 6 p.m. on a normal work day, they would not be stopping work for dinner. Only 31.8 per cent of respondents reported that they did not eat dinner at the factory. By contrast, 68.2 per cent ate dinner at the factory. Thirty-two per cent reported stopping work for 30 minutes and 12.2 per cent for one hour. According to Indonesian labour law, employers are required to provide at least a half hour of rest for every four hours worked that is not counted as work time. It is acceptable to provide breaks after more than four hours of work to accommodate lunch and prayer when this is agreed to in writing with workers. To workers who work overtime for three or more hours, employers must provide adequate time for rest and a meal break in addition to water and nutritious food of at least 1,400 calories.12 If, in fact, workers are working into the evening, then further research will be required to find out what workers really think about overtime and whether this overtime is voluntary, given the high number of workers (78.6 per cent) who claimed that overtime was not a concern at their factory. That said, 5.7 per cent of workers reported discussing the issue of excess overtime with co-workers, 11.0 had raised the issue with their supervisor or manager, and 4.2 per cent had raised it with their trade union representative (see Table 9).

10 Dharana (2012) 11 Manpower Act No. 13 of 2003, Art. 77. 12 Manpower Act No. 13 of 2003, Art. 79.MoMT Decree No. KEP.102/MEN/VI/2004, ARTS. 3, 7

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Table 9: Level of concern among factory workers over working hours Level of worker concern over working hours Too much overtime Too much work on Sundays Worker count % Worker count % No, not a concern 620 78.6 345 56.2 Yes, discussed with co-workers 45 5.7 69 11.2 Yes, discussed w/ supervisor or manager 87 11 129 21 Yes, discussed with trade union representative 33 4.2 53 8.6 Yes, considered resigning 3 0.4 7 1.1 Yes, threatened a strike 1 0.1 2 0.3 Yes, mounted a strike – – 9 1.5 – = nil It appears that overtime is a common practice in all work sectors in Indonesia. Almost three-quarters of regular employees and half of all casual employees worked more than 40 hours per week in 2010. One-third of the total number of employed people worked overtime in 2010. In West Java and Jakarta, where the factories surveyed in this study are located, 37.2 per cent and 48.4 per cent of all employees worked more than 48 hours per week.13 In the Indonesian workforce as a whole, it appears that women work fewer hours’ overtime than men, perhaps owing to family obligations. In 2010, 77.6 per cent of male and 66.8 per cent of female regular employees worked more than 40 hours per week, while 59.1 per cent of male and 26.8 per cent of female casual employees worked more than 40 hours per week.14 These numbers, however, represent a large cross-section of the Indonesian work force, covering a range of incomes. Presumably, many of these women could afford to choose not to work overtime and could live solely off the regular wages that they earned. Indonesian law states that both the worker and their employer must agree in writing to work overtime, and that the agreement must include the name of the worker and the amount of hours to be performed. Overtime must not be coerced or made necessary in order to earn the minimum wage, and should not exceed three hours per day or 14 hours per week.15 The baseline data revealed potential irregularities in relation to the signing of the written overtime agreement. Though the agreement should be signed by the supervisor and the worker, proper procedure occured in only 17.6 per cent of cases, while 62.3 per cent of workers reported that they signed the agreement themselves (see Figure 3). In some cases the overtime agreement was signed by the supervisor (8.7 per cent) or other factory manager (4.6 per cent). Compliance assessments will look into this issue in more depth and devise solutions by working with managers and workers.

13 ILO (2010) 14 ibid. 15 Manpower Act No. 13 of 2003, Art. 78, 85; MoMT Decree No. KEP.102/MEN/VI/2004, Art. 3, 4, 6; KEPMEN No. 102 TH 2004, Art No. 6.

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Figure 3: Procedure for signing overtime agreements in factories, as reported by workers

3.3 Compensation Workers showed great concern regarding their wages. These concerns related to payment of wages (71.5 per cent), excess pay deductions (84.1 per cent), in-kind compensation (45.6 per cent), low wages (83.2 per cent), confusion about the piece-rate (58.3 per cent) and broken punch clocks (76.8 per cent). Workers consistently raised their concerns with management staff and trade union representatives. Resigning and striking were much less common responses. Figure 4: Concern among factory workers regarding pay practices

0 100 200 300 400 500

Late payment

Deductions

In-kind

Low wages

Confusion about piece-rate

Broken punch clock Yes, discussed with co-workers

Yes, discussed w/supervisor or manager

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Yes, considered quitting

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No. of workers

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The concerns over wages highlighted in these baseline data are consistent with findings from the rest of the manufacturing industries in Indonesia. Wages in Indonesia are very low. Factory workers in Indonesia make between US$100 and US$200 per month. By comparison, workers in China earn just over US$300 per month, followed by Malaysia (US$298), India (US$269) and Thailand (US$263). Compensation is a point of contention between the Indonesian employers’ association, APINDO, and workers. APINDO claims that the low wage is necessary to attract new businesses and foreign investment into Indonesia.16 Some economists, however, believe that it is becoming increasingly difficult to live on the Indonesian minimum wages because inflation, especially of food prices, is exceeding wage increases. Workers, therefore, are struggling to pay for basic necessities. According to the Central Statistics Agency, food prices rose by nearly 16 per cent in 2010, while the wages of factory workers grew by less than seven per cent.17 In Indonesia, there also seems to be a connection between precarious contract work and low wages. The ILO’s Decent Work Country Profile reports that the percentage of casual employees whose monthly earnings are less than two-thirds of median earnings has increased in the past 15 years. The average rate of real wage growth was also found to be lower for casual employees (1.1 per cent) than for regular employees (3.8 per cent). In 2010, casual employees earned only two-fifths of the amount of the average real wages earned by regular employees.18 Perhaps, therefore, the reason why the workers surveyed had so many concerns over wages was because many of them were precarious contract workers. The baseline data collected also revealed pay practices related to the HR management of factories, such as a unique use of pay incentives. In Indonesian garment factories, pay incentives related to work effort are based on whether the worker or production line completes the production target before the end of the work day rather than on piece-rate pay. Around 79 per cent of workers reported that none of their pay was determined by piece-rate. Instead, it appears more common for factory managers to set a production quota for each worker or line of workers: 83.8 per cent of workers cited that they had a daily production quota, while 15.1 per cent reported that they did not have a target. In most cases, the production target was set daily. Positive incentives, in the form of bonuses, and negative incentives, in the form of deductions, were also used to incentivize work effort. Of the respondents, 20.9 per cent reported that they always received a bonus, and an additional 23.1 reported that they sometimes received a bonus when the daily production target was filled. Bonuses that reward attendance, productivity and long service are often instrumental in making factories more productive by raising productivity, reducing staff turnover and increasing the benefits of worker training. The various reasons for which workers reported receiving bonuses are outlined in Figure 6.

16 Dipa and Dewi (2012) 17 Chatani (2012) 18 ILO (2010)

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Figure 5: Reasons for the award of bonuses, as reported by factory workers

Negative incentives were less common. Factories in the sample focused principally on deductions for absences (67.9 per cent) and, to a lesser degree, tardiness (7.2 per cent). However, factories that reward output may inadvertently create incentives to reduce the effort workers put into production quality. One strategy used to offset perverse incentives is to require that workers correct their own defects, as experienced by 69.3 per cent of workers. Most workers (93.5 per cent) reported spending one hour or less per day making corrections. For such an incentive scheme to be effective, time spent on repairs must be remunerated at a lower rate than regular work. Nevertheless, a majority of workers (60.5 per cent) reported performing this task as part of their regular work day. Only 17.9 per cent repaired defects during scheduled breaks; 14.2 per cent remained after the end of the working day; and 7.4 per cent corrected errors during the overtime shift. It therefore appears that workers are rectifying their errors during the regular work day, remunerated at the same rate as for other work. This shows that factory management prioritizes positive incentives over negative ones, and does not offset positive incentives by paying workers less when they have to correct their own mistakes. Indeed, after the financial crisis, a survey carried out by USAID showed that the management of factories across footwear, garment and manufacturing industries were satisfactory at paying minimum wage and often supplemented wages with a performance bonus. It found that rewards for reaching targets went up to 10–35 per cent of a workers’ total take-home pay.19 Considering the positive use of pay incentives, the pay stub that factories issue to workers does not seem sophisticated. Most workers (95.5 per cent) reported receiving a pay slip. Information on the pay statement included the date (according to 75.4 per cent of respondents), ID number (68.0 per cent), regular hours (65.7 per cent), overtime hours (71.0 per cent) and wage rate (69.5 per cent). Information about union dues (22.4 per cent), bonuses (31.3 per cent) and deductions (15.0 per cent) was less common. Very few workers reported receiving information about their piece-rate (3.6 per cent) or pieces completed (0.4 per cent). (See Figure 7.)

19 Lake (2008)

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Figure 6: Information included on pay slips, as reported by factory workers

3.4 Workplace systems and relations Baseline data indicated that the garment factories surveyed demonstrated rigid factory structures, seemingly vigorous exercise of union membership and collective bargaining, and a high percentage of non-permanent contracted work. Factory structure appeared rigid because 91.5 per cent of workers reported that they had never been promoted, possibly a consequence of short duration of employment. However, 50 per cent of workers had been at their current job for more than two years, meaning that at least 40 per cent of workers had been in their current position for over two years without a promotion. Worker perceptions on barriers to promotion are detailed in Table 10. Table 10: Barriers to promotion in factories, as perceived by workers Barrier to promotion Worker count %

Prefer not to answer 63 6.9 Do not know the answer 122 13.3 Being a woman 14 1.5 Age 21 2.3 Education 65 7.1 Religion 2 0.2 Ethnic minority 1 0.1 Family responsibilities 6 0.7 Skill 181 19.7 Relationship with supervisor 3 0.3 Lack of opportunity 93 10.1 Union activities 8 0.9 Political views 1 0.1 None 349 38

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Another reason for lack of promotion might be insufficient training. The ILO-Akatiga survey found that only supervisors or technical managers received leadership training from the company. Most companies used on-the-job training for workers instead. Accordingly, workers felt that the skills they acquired throughout their employment were only partial. For example, workers assigned to sew sleeves would not be able to sew any other part of clothing. The only exception was for workers in the sampling division, who were required to make entire pieces of clothing. Most workers, therefore, only acquired a basic and limited set of skills during their tenure at factories, no matter how long their duration of employment. This could have been the reason they had not been promoted.20 It is therefore possible that a combination of low skill and lack of training led to the low incidence of promotions found in this baseline study. These factors are in addition to the inherently prohibitive flat structure of factories, in which most workers at the bottom rung of the hierarchy find it difficult to climb the steep slope to promotion. Despite the lack of promotions, rights to freedom of association and collective bargaining were vigorously exercised in factories participating in this baseline study. As seen in other sections, workers often raised their concerns with their trade union representative. Around 65 per cent reported being a trade union member and a slight majority, 51 per cent, reported being represented by a collective bargaining agreement. Today there are many trade unions operating in Indonesia. Under the 32-year Suharto regime, only one official workers’ confederation was recognized. However, the Trade Union Act of 2000 gave workers the right to organize into “free, open, independent, democratic and responsible” trade unions and federations and confederations of trade unions.21 Consequently there are now four confederations and 11,000 workplace unions.22 According to Freedom House, Indonesia performs well compared to Malaysia, Singapore and Philippines in providing freedom of expression and freedom of association for its citizens and is above the regional average in Freedom House's Civil Liberties and Political Rights Index. 23 It seems, however, that unions in Indonesia face problems with organizing, governing and navigating the national labour court system.24 In addition, the abundance of unions and federations leads them to compete against one another. Divisions within sizable unions are frequent, such as the split between the garment union TSK into TSK Kalibata and TSK Pasar Minggu. The increase in the use of precarious workers is also a challenge for unions, since most union members are permanent workers. The unions see the trend of factories hiring non-permanent contract employees as a threat, since workers may not organize into unions if they are on precarious contracts, fearing that their contract will not be renewed.25 In addition, on an enterprise level, the American Center for International Labour Solidarity reports that there is considerable anti-union discrimination by employers. Often, they argue, employers form yellow unions to undercut employers’ unions, refuse to recognize unions, terminate union

20 Buckley and Mwamadzingo (2012) p. 45–7 21 Trade Union Act No. 21 of 2000, Art. 1, 13, 18, 25. 22 The Brunei Times (2012) 23 Freedom House (2012) 24 Caraway (2010) 25 Reerink (2006)

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officers and fire charges against union activists.26 Another obstacle to union activity is that these unions are up against only one employers’ association, APINDO, which makes social dialogue difficult.27 It is possible that the above reasons led any workers surveyed in this baseline study who were not members of a union to exhibit some concern over the consequence union membership might have on their job tenure. For example, 8.4 per cent of workers reported that it was likely that union membership would cost them their job, and another 16.7 per cent believed that they might be dismissed for taking out union membership. A small proportion (1.2 per cent) reported having been punished for their union activities. Despite the apparent weaknesses of unions and collective bargaining rights in Indonesia, efforts are already under way aimed at strengthening these rights. In June 2011, Indonesian textile, clothing and footwear unions such as Gabungan Serikat Buruh Indonesia (GSBI), Garteks, Kongres Aliansi Serikat Buruh Indonesia (KASBI), Serikat Pekerja Tekstil, Sandang and Kulit (SPTSPK), major supplier factories, and major sportswear brands such as Adidas, Nike and Puma signed a pact to ensure that brands and factories respected freedom of association.28 Finally, a theme affecting many indicators studied in this baseline report is workers’ contracts. A large majority of workers (80.1 per cent) reported signing a contract and 97.9 per cent of those workers reported that the contract was in Bahasa Indonesia, a language they could understand. Table 11 provides a breakdown of various types of worker contract, while Figure 7 compares the proportion of non-permanent and permanent workers in the factories. Table 11: Types of contract on which factory workers are employed Type of contract Worker count %

Training 45 5.9 Apprentice 8 1.0 Home worker 11 1.4 Subcontractor 79 10.3 Bonded 18 2.3 Probationary 67 8.7 Temporary 7 0.9 Fixed duration 318 41.5 Unlimited duration 213 27.8

26 Caraway (2010) 27 Reerink (2006) 28 International Trade Union Confederation (2011)

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Figure 7: Number of non-permanent and permanent workers at Better Work factories

Firms may have hired workers on non-permanent contracts because Indonesian law imposes high severance pay and short-term contracts offset this cost. After more than six months of work, employers are obliged to pay workers one month’s worth of wages; after two years, two months’ wages; after four years, four month’ wages, and so on up to nine months’ pay after 20 years of service.29 In addition, it is relatively simple for firms to hire non-permanent workers for a significant period of time on multiple short-term contracts. The maximum period for a short-term contract in the garment industry, which is considered “new product work”, is two years. Legally, the initial contract can be extended once for one year. After the extension, an employer is required to either hire the worker permanently or let them leave with an allowance.30 However, if a worker has a period of rest between contracts, the work period returns to zero and the employer is allowed to hire the worker again on another short-term contract.31 Implications for workers on precarious contracts include job insecurity, few training, promotion, or union involvement opportunities, and limited benefits and social protection rights.32 Short-term contract work could explain why workers in this baseline study reported a lack of promotion, as firms have no incentive to invest in training their temporary workforce. Such contracting and training practices could harm the long-term competitiveness of the Indonesian garment industry. Despite the negative implications of non-contract work, Indonesia’s Constitutional Court decision no. 27, passed on 17 January 2012, assures non-permanent contracted workers the same security, benefits and rights as permanent workers. Employers must now either put all workers on permanent contracts or include in its agreement with the outsourcing company a “Transfer of Undertaking (Protection of Employment)” agreement to ensure that the subcontracted worker receives all the above mentioned benefits.33

29 http://www.ilo.org/dyn/eplex/termdisplay.severancePay?p_lang=en&p_country=ID&p_all_years=Y 30 KEPMEN No. 100 of 2004 in section 3, section 8 31 The Ministerial Decision of the Indonesian Minister of Manpower and Transmigration on the implementation provisions (No. KEP.100/MEN/VI/2004) 32 De Jonghe, Sanyoto and Vanhuyse (2009) 33 Circular of the Director General of Industrial Relations and Labour Social Security, The Ministry of Labour and Transmigration of the Republic of Indonesia, No. 31 concerning implementation of constitutional court’s decision No. 27. 20 Jan. 2012.

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3.5 Training opportunities It is important to measure staff training as it both represents a company’s investment in human capital and motivates workers to be more efficient. Workers reported that training was provided on a range of different topics, and only a small percentage (6.4 per cent) reported receiving no induction training at all. Table 12: Induction training received by factory workers Type of training received Worker count %

No induction training 59 6.4 Basic skills 268 29.2 Skills upgrading 183 19.9 Worker rights 257 28 Labour law 204 22.2 Collective bargaining 242 26.4 Safety and health 325 35.4 Safe machine operation 243 26.5 Pay procedures 225 24.5 Benefits 169 18.4 Fines 21 2.3 Work hours 270 29.4 Overtime practices 243 26.5 Grievance procedures 164 17.9

These data are consistent with previous research on the training of workers in manufacturing industries. The ILO-Akatiga survey found that after initial hiring, workers received a few days of sewing-skill lessons. Most companies preferred to provide an initial training course and follow an on-the-job training model thereafter. By comparison, supervisors and technical managers received more expertise and skills training than production workers. Though 97.7 per cent of workers in the ILO-Akatiga survey perceived that entrepreneurship training was important or very important, no workers were given this.34 According to data collected by the World Economic Forum ranking the training practices of Indonesian businesses, Indonesia ranks poorly compared to its peers when measuring extent of staff training. On a scale of 1 to 7, 7 being the most invested in training, Indonesia ranked 4.5, lower than Singapore (5.6) and Malaysia (4.9) but higher than the Philippines (4.4).35 Even smaller numbers of workers in this baseline study reported receiving training within the past six months (see Table 13).

34 Buckley and Mwamadzingo (2012) pp. 45–7 35 Schwab and Porter (2008)

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Table 13: Training received by factory workers within past six months Type of training received within last six months Worker count %

None 123 13.4 New skills 125 13.6 New equipment 71 7.7 New operations 104 11.3 Worker rights 122 13.3 Collective bargaining 107 11.7 Supervisory skills 27 2.9 Grievance procedures 50 5.4 Safety and health 192 20.9 Safe machine operation 121 13.2 Factory organization 53 5.8 Other training 74 8.1

There may be a link between the high incidence of non-permanent contract workers seen in this baseline study and the lack of continuous training, as managers are more likely to make human capital investments in permanent workers. Considering that most workers in this study are on non-permanent contracts, managers have little incentive to train most workers. 3.6 Respect and welfare Relationships between workers, management, and supervisors are of great concern to workers. A high proportion of workers (85.2 per cent) reported concerns over sexual harassment. Moreover, 79.3 per cent were concerned about verbal abuse such as shouting or vulgar language, and 87.4 per cent with physical abuse such as striking or pushing. Typically, 30 per cent of workers had discussed their concerns with a supervisor or manager, and another 30 per cent had raised concerns with their trade union representative. Another 10 per cent of workers had considered resigning. Table 14: Workers’ concerns regarding sexual harassment and verbal and physical abuse in factories Level of worker concern regarding sexual harassment and verbal and physical abuse

Sexual harassment

Verbal abuse (e.g. shouting,

vulgar language)

Physical abuse (e.g. striking,

pushing) Worker

count % Worker

count % Worker

count %

Not a concern 54 14.8 88 20.7 46 12.6 Discussed with co-workers 37 10.1 92 21.6 43 11.8 Discussed with supervisor or manager 117 32.1 122 28.6 111 30.4 Discussed with trade union representative 110 30.1 93 21.8 114 31.2 Considered resigning 32 8.8 27 6.3 40 11 Threatened a strike 4 1.1 1 0.2 2 0.5 Mounted a strike 11 3 3 0.7 9 2.5 Total 365 100 426 100 365 100

Furthermore, there are few repercussions for such behaviour, according to Indonesian Criminal Code. Although there are provisions in Indonesian Criminal Code on crimes against decency, it does not specifically mention the term “sexual harassment.” Article 281 of this code can be used as the

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basis for filing a complaint about sexual harassment, which may result in a short term of imprisonment or fine for “any person who deliberately intends to publicly offend against decency.”36 However, there is a basis for a worker’s grievance against sexual harassment. According to Article 1365 of Indonesian Civil Code, if unlawful action has caused aggrieved losses to the worker, he or she may claim damages. The worker has the right to resign if the company endangers his or her life, safety, health or morale. According to the MoMT, work that exposes employees to sexual harassment can be deemed as dangerous work.37 The Indonesian government, with the support of the ILO, has issued guidelines on sexual harassment through a government circular. These guidelines outline forms of, means of preventing and mechanisms for responding to, sexual harassment.38 The ILO Committee of Experts on the Application of Conventions and Recommendations (CEACR) has emphasized that sexual harassment is a form of sex discrimination and should be addressed within the requirements of the Discrimination (Employment and Occupation) Convention, 1958 (No. 111). Sexual harassment undermines equality at work by calling into question the integrity, dignity and well-being of workers. The productivity of firms is also impaired as sexual harassment weakens the basis upon which work relationships are built (“General observation on Convention No. 111”). It is therefore imperative to create awareness around the issue and devise creative ways to encourage companies to follow guidelines. It is worth noting that the issue of sexual harassment requires closer study to understand the particular nature of sexual harassment in the Indonesian garment industry. Better Work Indonesia will be working on this through factory assessments and capacity-building measures. Even if a person wishes to report cases of sexual violence, social and cultural norms and structural problems such as ineffective complaint procedures may prevent them from doing so. Women’s organizations designed to respond to complaints also experience challenges. For example, the Indonesian National Commission on Violence Against Women may only conduct investigations to recommend state institutions to take further action.39 This structural challenge could prevent a victim from reporting events, taking remedial action and taking perpetrators to court. High levels of sexual harassment may be related to Indonesian hierarchal customs in the workplace. According to research into Indonesian HR management, Indonesian culture rates highly in terms of power distance, collectivism and uncertainty avoidance, these being potential obstacles to healthy relationships between management staff and workers in the workplace.40 These cultural characteristics present challenges in training of management and equity of workers.41 Workers also reported that verbal and physical abuse were problems in factories. Around 79 per cent of workers reported that verbal abuse was a problem in garment factories, and 87.4 per cent of workers reported physical abuse. These are high numbers, and further research into these issues is recommended, especially through assessments.

36 Indonesia. Directorate General of Law and Legislation, Ministry of Justice. Penal Code of Indonesia. Jakarta: ed. 1999. http://www.humanrights.asia/countries/indonesia/laws/legislation/PenalCode.pdf [19 June 2012]. 37 Baker & McKenzie International (2009) 38 ILO and MoMT (2011) 39 Asian Human Rights Commission (2011) 40 Stening and Ngan (1997) pp. 3–15 41 Bennington and Habir (2003) pp. 373–92

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The practice of correcting workers in a disrespectful way was also found to threaten the work environment (see Table 15). Only 59.4 per cent of workers felt that their supervisor corrected their mistakes with fairness and respect, while 32.4 per cent reported that respectful supervision occurred only sometimes. Another 8.2 per cent felt that respectful corrections were a rare occurrence. Table 15: Fairness and respect shown to workers by supervisors in factories, as perceived by workers Fairness and respect shown by supervisors when correcting workers Worker count % All of the time 48 28.2 Most of the time 53 31.2 Sometimes 55 32.4 Rarely 14 8.2

According to workers, common causes of such disrespect from supervisors included making a mistake (9.4 per cent of respondents) and missing work (8.0 per cent). However, the most commonly perceived cause, cited by 36.7 per cent of respondents, was “none”. (See Table 16) Table 16: Causes of disciplinary action in factories, as perceived by workers Causes of disciplinary action in factories Worker count % Refusing to work overtime 17 2.1 Making a mistake 76 9.4 Missing work 65 8 Speaking while at work 23 2.8 Falling asleep 26 3.2 Participating in a strike 10 1.2 Falling pregnant 3 0.4 Complaining about the production target 20 2.5 None 298 36.7

Table 17 lists the various forms of disciplinary action taken by supervisors, as reported by respondents, including shouting (cited by 19.3 per cent), insulting language (11.2 per cent) and vulgar language (5.3 per cent). Table 17: Types of disciplinary action taken by supervisors in factories, as reported by workers Type of disciplinary action Worker count % Shouting 177 19.3 Using insulting language 103 11.2 Using vulgar language 49 5.3 Slapping 1 0.1 Striking (using stick/belt/whip) 1 0.1 Striking (using material) 1 0.1 Withholding of wages 7 0.8 Requiring worker to work extra hours 13 1.4 Requiring worker to work through lunch 7 0.8 Other 65 7.1

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It would appear, however, that workers viewed disrespectful and abusive behaviour as acceptable according to the rules of the factory. Almost all workers (98.7 per cent) considered that supervisors were fair or better at following the rules of the factory (see Table 18). This seemingly counter-intuitive finding requires more study. Table 18: Adherence to factory rules by supervisors, as perceived by factory workers Supervisor adherence to factory rules, as perceived by workers Worker count % Excellent 103 15.4 Very good 117 17.5 Good 246 36.8 Fair 194 29 Poor 8 1.2

This seemingly hostile work environment for Indonesian garment workers might be related to a lack of social justice and social inclusion of women in Indonesian work environments in general. Indonesia scored low–medium on the gender equality index, a composite measure reflecting inequality in achievements between women and men in reproductive health, empowerment and the labour market. Between 1995 and 2011 this number has decreased, with the result that Indonesia is currently ranked 100 out of 132.42

42 UNDP (2011)

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Section 4: Beyond the workplace This section highlights factors that affect workers’ lives outside the workplace, including their children and degree of financial independence and life satisfaction. In addition, specific to Better Work Indonesia, workers were asked about their use of radio, television, mobile phones, the internet and social media, to aid the development of new programme innovations aimed at better communicating information to workers. 4.1 Children of workers A significant minority of workers cited that they were parents: 38.3 per cent reported having one or more sons, and 38.6 per cent one or more daughters. For Better Work, one indicator of a human development case relates to the impact that monitoring of work hours and wages has on school attendance by children. Most school-aged children of participants in this study were found to be attending school. However, 3.2 per cent of sons and 3.4 per cent of daughters were not in school for financial reasons. Table 19: Education among dependents of factory workers Education of factory workers’ dependents Sons Daughters Worker count % Worker count % My school-age children are in school 266 76.7 265 75.1 I cannot afford to send all of my children to school 11 3.2 12 3.4 There are other reasons why my children are not in school 70 20.2 76 21.5

This finding is significant, as it indicates that workers who are also parents are earning enough to send their children to school and thereby reflects Indonesia’s progress toward universal primary education. Currently in Indonesia, 94 per cent of children aged 7–12 are enrolled in primary school. However, according to UNICEF, a key challenge is getting children from primary school to secondary school. Almost half of children from poor families do not enrol in junior secondary school. Many discontinue their studies after completing their primary education in order to enter the workforce.43 4.2 Financial independence Ultimately, Better Work seeks to improve the lives of workers. Important considerations are whether work is helping families to pay off debt, keep children in school or realize other life aspirations. Most workers reported that they sent money to parents or family members. Nearly half (47.2 per cent) made family contributions regularly, while 35.3 per cent made such contributions occasionally. A significant proportion (82.5 per cent) of workers, therefore, made contributions to their family’s wealth. Table 20: Remittances to family members by factory workers Frequency of remittances to family members Worker count % Regularly 143 47.2 Occasionally 107 35.3 Rarely 24 7.9

43 UNICEF Indonesia 2009.

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Frequency of remittances to family members Worker count % Very rarely 7 2.3 Never 22 7.3

As 81.6 per cent of workers reported that they lived with their families, many of them would not be considered remittance-giving migrant workers under commonly used definitions. However, since they are nevertheless giving money to their families, Better Work considers their contributions as remittances for the purpose of discussion of the country context. Remittances are a substantial source of capital that can bring about poverty alleviation through economic development. In Indonesia, for example, the amount of remittances from abroad is larger than the revenues of some local governments.44 These and other data, however, come from households that are receiving remittances from outside Indonesia, which account for 1.6 per cent of Indonesia’s GDP. More research is required on inter-country and inter-province remittances before firm conclusions can be drawn.45 Although the baseline data showed that migrant workers in Indonesia gave money back to their families for useful purposes, 49 per cent of workers also reported that they needed and received financial help from family members. This figure is high given the familiar characterization of garment work as a strategy through which families can climb out of poverty through industrialization, and is also counter-intuitive considering the high percentage of workers who send remittances. This finding might be explained by demographic or seasonal factors affecting the time frame in which workers send and receive money, and needs to be further investigated. Table 21: Financial help received by factory workers from their families Frequency with which worker receives financial help from family members Worker count % Regularly 19 3.4 Occasionally 142 25.4 Rarely 78 13.9 Very rarely 35 6.3 Never 286 51.1

Since 2006, workers’ wages in Indonesia have not kept up with rising food prices, reducing the purchasing power of workers.46 The fact that workers’ wages are barely sufficient to cover their basic living expenses may have led some to seek financial help from their families. 4.3 Life satisfaction The baseline data also measured indicators of well-being among workers through questions on general life satisfaction. For example, given the rigours of factory work, it is possible that workers may develop mental health concerns. Though few workers reported experiencing symptoms of depression most of the time, many reported symptoms of depression some of the time, including feeling restless (29.1 per cent), fearful (15.8 per cent), sad (22.0 per cent), tearful (15.0 per cent) and hopeless about the future (20.4 per cent).

44 International Fund for Agricultural Development (2007) 45 World Bank (2011) 46 Chatani (2012)

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Figure 8: Symptoms of anxiety and distress experienced by factory workers

These numbers are not insignificant, and can be connected to workers’ concerns regarding sexual harassment and physical and verbal abuse as highlighted in Section 3.6. The symptoms experienced by workers could also be related to the high incidence of short-term contract and outsourced labour in Indonesian garment factories (see Section 2.4). Such workers have limited access to social protection, are less likely to be union members, and are at a higher risk of dismissal or unemployment. Being in such a precarious position could make workers restless, fearful, sad or hopeless.47 This is an important area for further research. 4.4 Communication To assist the development of new worker communication programmes using contemporary social media, workers were asked about their interest in receiving information and possible mechanisms through which to convey it to them. Workers indicated a strong interest in receiving information about OSH, wages and other topics. Of the 434 workers who responded to the question “Are you interested in receiving best practice information?”, 83.6 per cent responded “Yes, definitely.” Only 3.7 per cent responded that they were not interested. (See Table 22) Table 22: Interest expressed by factory workers in receiving best practice information Level of worker interest in receiving best practice information Worker count % Yes, definitely 363 83.6 Yes, maybe 55 12.7 No, definitely not 16 3.7

Four possible modes of communication were proposed to workers: mobile phones, television, radio and the Internet.

47 De Jonghe, Sanyoto and Vanhuyse (2009)

0

10

20

30

40

50

60

FeelingRestless

Feeling Fearful Feeling Sad Crying Easily FeelingHopeless about

the Future

Not at all

A little of the time

Some of the time

% o

f wor

kers

Symptom of anxiety/distress

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Among the 519 workers who responded to a question about mobile phone ownership, 90.8 per cent reported that they had a mobile phone. However, most workers did not make intensive use of their phones, with nearly 50 per cent reporting that they used them only once per day or less (see Table 23). Table 23: Mobile phone usage by factory workers Frequency with which mobile phone used by workers Worker count % Almost never 23 5.1 Occasionally, once per day or less 193 43 Often, a couple of times per day 133 29.6 Very often, several times per day 100 22.3

Watching television and listening to the radio were found to be common activities, indicating that these media could be an effective way of reaching workers. Among the respondents, 77.4 per cent reported that they watched television daily, while 50.3 per cent listened to the radio daily. Table 24: Daily radio usage by factory workers Radio programmes listened to daily by workers Worker count % News 93 19.9 Talk shows 9 1.9 Music 96 20.6 Other 37 7.9 None 232 49.7

A smaller percentage (38.6 per cent) of workers used the Internet. Some 20 per cent accessed the internet through their phone, suggesting that it might be possible to contact workers by both text and Internet messages. Table 25: Internet usage by factory workers Internet usage by workers Worker count %

Accessed at home 13 2.8 Accessed at Internet café 65 14.1 Accessed at family friend's house 6 1.3 Accessed on cell phone 94 20.4 No Internet 282 61.3 When asked about their use of social media, a significant percentage of workers (29.8 per cent) reported that they used Facebook.

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Table 26: Usage of social media among factory workers Social media site used by workers Worker count % Facebook 140 29.8 Twitter 11 2.3 Friendster 6 1.3 Youtube 15 3.2 Other 17 3.6 None 281 59.8

Therefore, based on usage patterns, it appears that the most effective means of reaching workers directly may be through text messages or Facebook, via their mobile phones.

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Section 5: Conclusion Given the myriad worker issues revealed through the baseline data, various further avenues of research and policy changes are recommended. Considering the troubling occupational safety and health patterns found, it is recommended that all Better Work stakeholders pay special attention to this issue. The fact that one in four workers reported having been injured at least once at work, and that severe thirst and extreme heat emerged as important, connected issues, indicates that these are serious problems. Better Work Indonesia recognizes the gravity of this issue, and is engaging existing and new enterprise advisors in expert OSH training according to standards set by the MoMT. Mitigating serious OSH issues will be an important part of Better Work Indonesia’s advisory services in the next year. Since the Indonesian government and many companies there have adopted the ILO’s provision on OSH management systems, the next step is to empower and educate workers. This is the goal of Better Work Indonesia’s Information, Education and Communication (IEC) Mobile Initiative described at the end of this section. The IEC programme, combined with Better Work Indonesia, stakeholder, and buyer involvement in implementation of OSH management systems in enterprises, and health coverage for all, should decrease the incidence of injury. The findings regarding hours and rest days are connected to Indonesia’s highly decentralized government. Workers may be working extra hours because they perceive that their wages are not sufficient. Minimum wages, however, are set by local district and town/city governments through tripartite negotiations that are subject to the approval of the provincial governor.48 Further research should be undertaken into manufacturing wages and how these wages affect workers’ lives. Higher wages would mean that workers would need to work fewer overtime hours, resulting in a better quality of life. With regard to remuneration, lack of information on pay slips and concerns regarding compensation may be closely connected. Since most workers reported that information referencing union dues, bonuses, deductions, piece-rate, and pieces completed was missing from pay slips, it is possible that minor changes in HR management practices in garment factories might make wage practices clearer to workers. For example, a dated pay slip might mitigate the concern expressed over late payment of wages. It might also encourage the management to pay wages on time, as any late payments would be on record. Deductions and confusion about piece-rate could also be clarified, at least in part, by including this information on the pay slip. Though findings in this study suggested that collective bargaining rights were vigorously exercised in workers’ factories, it would also be interesting to study in more detail what action union officials take when faced with common worker complaints. In addition, efforts should be made to increase the number of workers employed on permanent contracts. Though employers are obliged to provide workers on non-permanent contracts with the same rights as those on permanent contracts, they often do not do this. Perhaps a cap on the number of non-permanent contract workers could be implemented in companies. Being on a permanent contract would make it easier for workers to obtain promotion, join unions and enjoy other benefits and general rights. Regarding training, the findings indicated that workers should receive more induction training on all issues, but especially on basic skills, health and safety, safe machine operation and worker rights, as 48 Caraway (2010)

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these are crucial factors in ensuring workers’ well-being. In addition, only very small percentages of workers reported that they had received training in the past six months, indicating a need to develop ongoing training opportunities. At the very least, this would help minimize worker injuries and concerns over workplace hazards, pay procedures, grievance procedures and other issues. At best, induction and ongoing training would allow more workers to earn promotion. As regards respect and welfare, an alarming number of workers reported concerns relating to sexual harassment and verbal and physical abuse. The overwhelming majority of workers, however, believed that supervisors were fair or better at adhering to factory rules. It seems therefore, that workers believe that it is acceptable under the factory rules to be treated this way. Accordingly, workers should be trained in identifying inappropriate workplace behaviour, while managers should be trained in understanding the concept and negative impact of sexual harassment. In addition, employers should be advised to develop policies and procedures to prevent, identify and deal with sexual harassment. Finally, given that a considerable majority of workers have children, and that these workers reported that they were clocking in long hours, were not union members, and were not getting promoted, it might be prudent to study quality childcare options for workers’ children. This would allow such workers to become more involved in unions and other work-related activities.

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Better Work Impact Research

The Better Work global programme is supported by (in alphabetical order):• Australian Government• Levi Strauss Foundation• Netherlands Ministry of Foreign Affairs• State Secretariat for Economic Affairs, Switzerland (SECO)• United States Council Foundation, Inc. (funds provided by Gap Inc., Nike and Wal-Mart)

Additional funding for this publication provided by the Federal Ministry for Economic Cooperation and Development, Germany (BMZ), and the International Finance Corporation (funds provided by IrishAid and The Walt Disney Company)