The Practice of Industrial Relations in Indonesia

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The Practice of Industrial Relations in Indonesia BACKGROUND At present, industrial relations in Indonesia is entering a new phase: an era of transition. The democratization process, partially triggered by the fall of the authoritarian Soeharto government, together with the implementation of the regional autonomy policy, is largely influencing this transition. Previously, industrial relations in Indonesia was under the tight control of the central government. The New Order Government regulated the existence of labor unions (at that time only one labor union was officially recognized by the government), stipulated the level of minimum wages, and influenced the general labor conditions. Nowadays, the industrial relations system is becoming increasingly decentralized, even though many components are still influenced by the paternalistic central government practices of the past. Many argue that the reason the industrial relations system in Indonesia is still in transition is because its future direction remains unclear. Particularly as to whether industrial relations will be fully decentralized, partially decentralized where the dominance of the central government is gradually reduced, or, whether it is not yet possible for industrial relations in Indonesia to be free of the legacy of the New Order centralized policies. The new government administration and decentralization policy in Indonesia has transformed the way decisions are made within the industrial relations system. Nowadays, elements of decentralization as well as dialogue are starting to influence decision-making processes. In addition, over the past two years, several changes have been made to labor laws and regulations. For example, the local governments currently have the authority to determine minimum wages in their regions. Another important development has been the creation of Law No. 21, 2000,
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