Politicizing the Minimum Wage: Wage Councils, Worker Mobilization, and Local Elections in Indonesia

Abstract

Indonesia’s weak labor movement transformed local wage councils from institutions of wage restraint into institutions that delivered generous wage increases. This article argues that the arrival of direct elections created an opportunity for unions to leverage elections to alter the balance of power on the wage councils. Activating that leverage required increased contentiousness and coordination among unions. As unions mobilized around wages, conflict with capital intensified and produced disruptive protests that led incumbents to side with workers. Unions also developed innovative tactics to sustain momentum in nonelection years. As unions turned the wage councils in their favor, employers fought back by shifting the scale of the conflict to the national level; the result was the recentralization of wage setting and more modest increases. In a global context of ever weakening organized labor, the Indonesian case shows how weak unions can gain power by mobilizing politically at the local level.