Jakarta. Labour has emerged as a new issue that will place more pressure on supply chains for global commodities. This includes palm oil. Indonesia has become accustomed to dealing with international – particularly European – criticism of its environmental practices. Recent figures, however, point to Indonesia’s improvements in deforestation rates, illegal logging and forest governance. 

Like the environment, Indonesia’s record on agricultural labour has been improving since the end of the New Order era. This has taken place in several ways. 

It commenced with international cooperation and the signing of treaties. Indonesia is the first country in the Asia-Pacific region to ratify all of International Labor Organization’s core treaties. It still leads several developed countries and major economies – including the US, China, Australia and Japan – in this regard, as they have not ratified all core instruments. This is the legacy of President Bacharuddin Jusuf Habibie and the post-New Order era. 

This has led directly to a long period of cooperation between the Indonesian government, the ILO, the European Union and the US in improving Indonesia’s labour standards. This has been particularly apparent in the agricultural sector, with a particular emphasis on palm oil. 

In 2015, the ILO commenced a diagnostic study on labour in the palm oil plantation sector. The study covered six particular areas: (i) employment status; (ii) wages; (iii) social dialogue; (iv) occupational safety and health; (v) child labour; (vi) labour inspection. The diagnostic study then outlined agreed actions, which become the basis of ILO cooperation and technical support for the palm oil. Furthermore, this also laid the groundwork for joint work in 2017 between the ILO, Indonesia and the Netherlands, as well as industry groups and trade unions on improvements in the sector. 

The joint program involving the Netherlands aimed to improve workers’ access to decent work, as well as support businesses to comply with international labour standards and national labour laws. This included direct support for enterprises to improve practices. 

In 2019, this program was expanded to involve more parties, including the US Department of State, the Ministry of Agriculture, the Ministry of Manpower, CEMA, the Indonesian Palm Oil Plantation (GAPKI), and both trade union and business groups. This work is ongoing, with direct on-the-ground outreach to workers in the field, trade unions and inspectorates. 

In contrast to negative campaigns against the palm oil sector, the work undertaken by the ILO and Indonesia -- and that of the US and the Netherlands -- sees the sector for what it is: an opportunity to improve the livelihoods of workers throughout the palm oil supply chain and to improve workers’ rights in Indonesia’s largest agricultural sub-sector. 

In the Dutch-sponsored program, certification program is key and this has underlined the role of Indonesia Sustainable Palm Oil (ISPO) in improving labour conditions in palm oil supply chain. A special project called “Advancing Workers’ Right in Indonesian Palm Oil Sector is being carried out until now with technical assistance from the Dutch government and involvement by GAPKI in social dialogue with labour union.  

One of the results is the establishment the network of oil palm workers and employees which enables better and more effective dialogue among oil palm stakeholders to solve labour and social problems in the industry. GAPKI also cooperates with the Dutch labour union (CNV) and local labour union (HUKATAN) addressing female workers in the industry followed by publication on the Practical Guidance of Protection of Woman Labour Rights in Oil Palm Plantation.  

ISPO requires the adherence of all companies to Indonesia’s laws and regulations, including all relevant labour laws. But it also has clear criteria and indicators related to labour, such as occupational safety and health; legal and administrative requirements, improvement of workers’ welfare and training, prohibition on child labour and discrimination, facilitation of trade union formation, and facilitation of worker cooperatives.

Importantly, there are clear prohibitions on child labour, forced labour and slavery, and mechanisms to ensure that workers are aware of their rights, such as the creation of labour union and the channel through which they can lodge a complaint. ISPO certification, as a certified assurance of labour rights, should remove any doubt about Indonesia’s commitment to improving labour rights. 

No country has a perfect record on labour. It’s well understood that the US labour market, for example, is plagued with unauthorized and undocumented labour. And that the Italian agriculture sector has a troubled record of worker exploitation. 

A key difference between Indonesia and these countries is that Indonesia is generally not a destination for migrant workers – and often the opposite is true. Many of the problems in Indonesia’s plantation sector have taken their root to poverty: a lack of opportunities in rural areas, and families relying on each other for unpaid labour on smallholder farms.

Cutting Indonesia’s workers off from international markets to ‘improve’ labour rights is not a solution. If anything, it could have the opposite effect and send families further back into poverty. If the West wants to improve the plight of Indonesia’s palm oil workers, its first move should be to accept ISPO as an assurance of workers’ rights. 

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Fadhil Hasan is a senior economist at the Institute for Development of Economics and Finance (INDEF). Sumarjono Saragih is the deputy chairman of labour affairs with the Indonesian Palm Oil Association (GAPKI)..

The views expressed in this article are those of the authors.

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