Abstract
This chapter reviews government policies with regard to industrialisation, regional development, employment and minimum wages. While the focus is on the post-Soeharto period, it also briefly reviews the policy framework of the Soeharto regime. Given the systemic change that occurred following the fall of Soeharto, the policy approach has changed from a highly centralised to a radically decentralised decision-making process. The decentralised decision-making is also extended to industrial relations, especially with regard to minimum wages. This has essentially created an element of labour market flexibility in terms of regional variations. Thus, labour-intensive activities can potentially relocate to regions with lower minimum wages while industrially advanced regions with higher minimum wages can specialise in high value-added activities. The chapter argues that the ultimate aim should be to strengthen backward and forward linkages within the industrial sector and among regions, and thereby create internal dynamics within Indonesia’s development path.
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Notes
- 1.
The Preamble was also influenced by several philosophical thoughts; one of them came from the Utilitarianism thought “The great happiness for the greatest number” of Jeremy Bentham inspired the founding fathers to formulate landmark and energising starting points in meaningful paragraphs of the Preamble. Inspired by the Soviet socialist revolution, like most independence leaders who fought against the colonial powers, the founding fathers of Indonesia were also deeply committed to social justice and equity.
- 2.
The concept of budget deficit as a difference between domestic revenues and domestic expenditures is more useful in analysing the impact of the budget on the domestic economy.
- 3.
See Booth (2016).
- 4.
An Indonesian economist summed up the reasons that the Japanese often are disliked here. Asked whether they are guilty of all they have been charged with, he said: “Of intent, no. Of being oblivious, insensitive, unthinking, short-sighted, excessively competitive, yes. They do not look at whose garden they are trampling on.” “Tanaka’s Explosive Trip” by Richard Halloranjan, The New York Times, 21 January 1974.
- 5.
Ibid.
- 6.
This involved deleting the product from the list of components that can be imported once domestic suppliers were identified.
- 7.
The share would be even greater if the oil sector was taken into account (Lewis 1994).
- 8.
The equalisation component of the trilogy was specified in the “eight paths of equalisation”. They are equalisations of (1) basic needs, (2) access to educations, (3) income distribution especially through labour-intensive economic activities, (4) employment opportunities though regional development, (5) entrepreneurship opportunities through credit access to economically disadvantage groups, (6) participation especially for youths and women, (7) population distribution through government-sponsored transmigration and (8) access to justice.
- 9.
- 10.
The 14 new industrial estates are (1) Bintuni, West Papua; (2) Buli, Halmahera Timur, North Maluku; (3) Bitung, North Sulawesi; (4) Palu, Central Sulawesi; (5) Morowali, Central Sulawesi; (6) Konawe, Southeast Sulawesi; (7) Bantaeng, South Sulawesi; (8) Batulicin, South Kalimantan; (9) Jorong, South Kalimantan; (10) Ketapang, West Kalimantan; (11) Landak, West Kalimantan, (12) Kuala Tanjung, North Sumatra, (13) Sei Mangee, North Sumatra; and (14) Tanggamus, Lampung.
- 11.
However, the 4.5 per cent average annual GDP growth during the period was lower than both high-performing Asian economies such as China, India and Vietnam and the pre-crisis years.
- 12.
See http://ekbis.sindonews.com/read/1083502/34/diguncang-phk-pemerintah-didesak-revisi-uu-ketenagakerjaan-1454845310, accessed on 29 February 2016.
- 13.
Dhanani et al. (2009) also make a similar point based on their analysis of labour market outcomes during 2000–2007.
- 14.
World Economic Forum, The Global Competitiveness Report 2009–2010.
- 15.
The 2013 Manpower Law is the main legal basis for the Wage Council. However, its origin can be traced back to the establishments of Dewan Penelitian Pengupahan Nasional (DPPN or National Wage Research Council) in 1969, followed by Dewan Penelitian Pengupahan Daerah (DPPD or Regional Wage Research Council).
- 16.
Government Regulation (Peraturan Pemerintah or PP) no. 78/2015.
- 17.
The Jakarta Post, 21 November 2012, http://www.thejakartapost.com/news/2012/11/21/jokowi-sets-jakarta-s-2013-minimum-wage-rp-22m.html, accessed on 19 March 2016.
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Tadjoeddin, M.Z., Chowdhury, A. (2019). Policy Perspectives. In: Employment and Re-Industrialisation in Post Soeharto Indonesia. Critical Studies of the Asia-Pacific. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-50566-8_7
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