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How is Neoliberalism in Indonesia and its impact on Workers?

Writer

Vanessa

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Hi Folks, although labor rights continue to be fought for, the cases of Neoliberalism still exist. Neoliberalism itself does not only occur in advanced countries like the United States, but it is also present in developing countries, and Indonesia is one of them. 

Neoliberalism occurs because of the desire of companies to reap more profits. One of the ways this is done is by implementing neoliberalism in the workforce, which means paying low wages to workers. Pay that is low, along with work hours and workload that are not proportional is one example of neoliberalism that often occurs. Those who work do not look at gender; there are both men and women. However, the fact is that the percentage of 90% of women working in the informal sector, such as laborers, where they receive low wages, no social security, and no legal protection is provided.

Read also: Women's Worker Rights in Indonesia 

 

General Definition of Neoliberalism

In its definition, according to Milton Friedman (1962), neoliberalism is a tendency that prioritizes macroeconomics, where state regulations regarding the economy are less prioritized, but focuses on economic stability  rather than employing people to reduce poverty. In other words, those working still do not receive privilege nor does it seem there is a difference in economic status due to their very minimal wages. Additionally, from David Harvey's (2005) perspective, neoliberalism is a doctrine that emphasizes guarantees of freedom and individual liberty through free markets, free trade, and respect for private property systems. 

 

Points Covered in Neoliberalism

  • The market as the ruler. 

Private companies can freely set wages that do not conform to what has been established by the government. This occurs to attract foreign investment within the country, even though it has social impacts and particularly on the welfare of workers. Thus, in Neoliberalism, the government has no control over the minimum wage (UMR) that must be paid by companies to workers.

  • Cutting the state budget for public services

Instead of providing services to the community, a portion of the government capital is actually used for subsidies to private/foreign companies. Additionally, it also provides tax relief to these companies to ensure their business collaborations are not rejected.

  • Deregulation

Reducing government regulations to achieve the goals of private/foreign companies to make excessive profits.

From the three points above, it can be seen that the government seems to pamper or surrender as long as there are foreign companies willing to invest. Although the impacts are vast, where the gap between the rich and the poor widens. The rich get richer while the poor get poorer. 

 

Forms of Neoliberalism in the Workforce

From the beginning, Neoliberalism has been considered a path to achieve the welfare of the people and the economic development of the country. However, the reality is just the opposite. In order to attract the attention of foreign investors, the state sacrifices the welfare of its people. With the promise of many workers who can be paid very low wages. Even though labor rights have long been fought for, it seems futile because they are defeated by those who hold the highest power. When discussing neoliberalism, there are certainly views that also discuss liberalism. To provide a clearer view, we will outline the differences between liberalism and neoliberalism concerning the workforce (labor) based on Adam Smith's perspective. Here are three perspectives of liberalism and neoliberalism:

  1. Liberalism is a mechanism used to regulate the economy of a country, while neoliberalism regulates the economy globally.

  2. Liberalism is implemented for the common good, while neoliberalism is for personal interest.

  3. In liberalism, the highest authority comes from the state/government. In contrast, in neoliberalism, authority is centered on an individual, not the state/government.

As we know, Indonesia continues to open its gates to foreign investment. If calculated, almost 93% of Indonesia is managed by foreign citizens. Therefore, it is not surprising that neoliberalism still occurs in Indonesia. The impact of Neoliberalism is the absence of prosperity and welfare for the majority of the population, rather than enriching the owners of these companies. This impact can be clearly seen around us, right? 

 

Neoliberalism Policies

As discussed above, the greatest power is no longer in the hands of the state rulers but in the hands of the highest capital owners. Therefore, the government does not have the power to regulate, let alone issue regulations to address the problems of Neoliberalism.

What has happened in the past and now cannot be changed, but we will not give up on helping to voice the concerns of workers. Additionally, we hope that the government will think more about the welfare of the people.

 

Written by Vanessa

 

References:

  1. https://www.berdikarionline.com/emansipasi-perempuan-versus-neoliberalisme/

  2. https://www.urbanpoor.or.id/artikel/apa-itu-neoliberalisme

  3. http://repository.unair.ac.id/70502/3/JURNAL_Fis.P.18%2018%20Per%20i.pdf

  4. https://www.kompasiana.com/gedesandra/54f94f26a3331178178b4940/neoliberalisme-di-indonesia-untuk-jokowi

  5. http://rizkie-library.blogspot.com/2015/09/neo-liberalisme-kebijakan-publik.html

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Based on the 2022 Violence and Harassment in the Indonesian Workplace Survey:

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A safe work culture cannot be built solely through slogans, campaigns, or mere statements of support. It requires tangible policies, accessible protection mechanisms, and the organization's courage to hold perpetrators accountable regardless of their position or contribution.

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Focus on competence.
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  1. Review the language in performance reviews.
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