W. E. B. Du Bois said that race was the major issue of the twentieth century, and it may be that, based on the last forty years beginning at the end of that century, it is inequality as well as race that pose the major challenges of this century.1 The decline of organized labor first obtained the attention of commentators in the early 1960s and has galloped along at a crescendo-like pace during the past fifty years, accelerating during the Reagan era and continuing steadily into this century – and simultaneous with it the growing gap between productivity and pay, particularly since 1979 (productivity enjoying a 69.6 percent increase with hourly pay only increasing by 11.6 percent).2 As can be seen in Figure 8.1, Between 1973 and 2016, productivity grew six times faster than compensation. Initially, “[r]apid productivity growth brought rising prosperity to all, as Western societies rode the wave of expanding factory employment.”3

This chapter examines the first decade of worker mobilization in post-Suharto Indonesia. At the national level, the labor movement experienced stunning success in shaping labor law reform during this period. In the absence of strong ties to political parties, unions created mayhem in the streets to capture the attention of politicians and raise the cost of supporting laws that unions opposed. Since both the executive and the legislature had to approve labor legislation, unions could stop the enactment of antilabor laws by peeling away legislative support. This task was facilitated by government instability and weak presidential control over coalition partners and the fact that the Minister of Manpower was from a labor background in some years. At the local level, by contrast, unions had fewer points of entry and less leverage. Although newly created tripartite wage councils gave workers a voice in wage-setting, executives had the final authority to determine minimum wages increases, and they were relatively immune to pressure from workers until direct elections were phased in between mid-2005 and late 2008.