Employment Relations in Indonesia’s Retail Sector: Institutions, Power Relations and Outcomes

Abstract

This thesis examines employment relations in Indonesia’s retail sector. Drawing on the disciplines of Political Economy, Economic Geography and Industrial Relations, it investigates the relationship between global retail and home and host country institutions in order to identify the factors responsible for the converging and diverging patterns in employment outcomes. The thesis develops an actor-centred institutionalist approach, which extends the utility of embeddedness theory by taking into account the impact of contestation between trade unions and corporate actors in multiple institutional arenas on firm-level industrial relations and employment outcomes. Using in-depth comparative case study methods, this approach is applied to a European retailer, an Asian transnational retailer and a prominent domestic retailer in the food industry. The thesis demonstrates that country-of-origin effect has little influence on firm-level employment relations in the Indonesian retail sector. Rather, similarities in the organization of work, skill formation and baseline remuneration in the three retailers are a consequence of product market pressure and regulatory and institutional constraints, while differences in job security and the distribution of wages and benefits stem from organized labour’s differential capacity to challenge the prerogative of management in each firm. As these findings suggest, while embeddedness theory provides useful insights into the behaviour and strategy of transnational retailers, its utility is greatly enhanced when it is combined with an actor-centred institutionalist approach that acknowledges the power relations between industrial relations actors in different institutional domains and the potential impact of contestation across those domains on firm-level employment outcomes.