Promoting Decent Work for All 1 Alan Boulton, Director ILO Jakarta Office INDUSTRIAL DISPUTE RESOLUTION CONFERENCE INTERNATIONAL PERSPECTIVES 3 October 2007 Melbourne “Industrial Dispute Resolution in ASEAN Countries: Some Recent Developments”

Promoting Decent Work for All 2 ASSOCIATION OF SOUTHEAST ASIAN NATIONS  Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Singapore, Philippines, Vietnam  560 million people, labour force 282 million  Wide differences in member countries (wealth, development, Government systems, etc)  Major changes in recent years (new members – Vietnam 1995, Lao PDR & Myanmar 1997, and Cambodia 1999; financial crisis; market economy; democracy; competition from China and India, etc)

Promoting Decent Work for All 3 RECENT LABOUR MARKET TRENDS IN ASEAN COUNTRIES  Average annual GDP growth between was 5.7 per cent (Cambodia 8.6%, Vietnam 7.7% cf. China 9.9% and India 7.2%)  Between 2000 to 2006, labour force increased by 35.8 million or 13.5 per cent (Cambodia 52.8%, Philippines 20%, Indonesia 11%, Singapore & Thailand  9%)  Many workers in export-oriented industries  Healthy productivity growth in ASEAN linked to sectoral shift from agriculture to industry & services  Informal economy has remained massive, about 60 per cent of ASEAN workforce 2006 (Cambodia & Vietnam 80%, Indonesia 60%, Thailand 53% and Singapore 8.8%)

Promoting Decent Work for All 4 SNAPSHOT: ASEAN’S 282 MILLION WORKERS  If ASEAN’s labour force (ages 15+) consists of 100 workers …  58 are men and 42 are women  47 work in agriculture; 35 in services; 18 in industry  7 are unemployed  59 work in the informal economy  11 live on less than US$1 per day  57 live on less than US$2 per day

Promoting Decent Work for All 5 MODERNIZING INDUSTRIAL RELATIONS (1) … Many developing countries in Asia are improving industrial dispute resolution as part of the modernization of their industrial relations systems Examples include:  Cambodia – the establishment of the tripartite Arbitration Council in 2003;  Indonesia – new Industrial Relations Disputes Settlement Act 2004 and the establishment of the Industrial Relations Court;  Viet Nam & China – steps towards developing new dispute resolution frameworks

Promoting Decent Work for All 6 MODERNIZING INDUSTRIAL RELATIONS (2) … A fair and effective system of industrial dispute resolution is a pre-requisite for growth and development  Existing systems deficient or unacceptable in new economic and social environment  Concern about rising tide of labour disputes  Recognition of democratic and labour rights  Concern about investment flows and market access

Promoting Decent Work for All 7 MODERNIZING INDUSTRIAL RELATIONS (3) … Particular challenges faced by developing countries in modernizing industrial relations  Background of government intervention  Adaptation of practices in industrialized countries  Institutional weaknesses (government, employers and workers)  Concern about social and political unrest

Promoting Decent Work for All 8 MODERNIZING INDUSTRIAL RELATIONS (4) … Key issues relate to freedom of association and freedom of collective bargaining  Only 4 ASEAN countries have ratified C87 on freedom of association  Workers’ organizations are either under government influence or fragmented with little strength  Limited experience with and scope for collective bargaining  Many disputes about “rights”

Promoting Decent Work for All 9 ILO membership since Fundamental Conventions C29C105C87C98C100C111C138C182 Brunei Cambodia Indonesia Lao PDR Malaysia * Myanmar Philippines Singapore * Thailand Vietnam , RATIFICATION OF ILO FUNDAMENTAL CONVENTIONS * Malaysia and Singapore ratified Convention No. 105 in years as indicated above, but later denounced their ratification of the Convention. Forced Labour Convention, 1930 (No.29); Freedom of Association and Protection of Right to Organize Convention, 1948 (No. 87); Right to Organize and Collective Bargaining Convention, 1949 (No. 98); Equal Remuneration Convention, 1951 (No. 100); Abolition of Forced Labour Convention, 1957 (No. 105); Discrimination (Employment and Occupation) Convention, 1958 (No. 111); Minimum Age Convention, 1973 (No. 138); Worst Forms of Child Labour Convention, 1999 (No. 182)

Promoting Decent Work for All 10 INDONESIA – SOME BASIC FACTS Population:220 million GDP growth:5.5% (2006) Inflation (CPI):6.01% (May 2007) Labour force:110 million (2006) Open unemployment:10.4% (2006) Formal/informal:63.8% of those employed work in the informal/traditional economy (2006) Wages (2007):DKI Jakarta Rp.900,560 (US$98 per month) Bali Rp.622,000 (US$68 per month) North Sumatra Rp.761,000 (US$83 per month)

Promoting Decent Work for All 11 Some remarkable progress since 1998  In democracy  In recovery from economic crisis  In labour law reforms THE INDONESIAN EXPERIENCE (1) …

Promoting Decent Work for All 12 THE INDONESIAN EXPERIENCE (2) … Ratification of ILO Conventions  C.87 Freedom of Association (1998)  C.105 Forced Labour (1999)  C.138 and 182 Child Labour (1999 and 2000)  C.111 Discrimination in Employment (1999) New Labour Laws  Trade Union Act 2000  Manpower Act 2003  Industrial Disputes Settlement Act 2004  Migrant Workers Act 2004 Unions  90 national federations of trade unions (September 2006)  11,444 trade unions at plant level (September 2006)  Total membership 3.39 million workers (2006)

13 Promoting Decent Work for All Potential for labour disputes… THE INDONESIAN EXPERIENCE (3) …

Promoting Decent Work for All 14 Industrial Relations Disputes Settlement Act 2004  Emphasis on bipartite settlement  Mediation by government mediators  Access to private conciliation and arbitration  New Industrial Relations Court at Supreme Court and District Court level THE INDONESIAN EXPERIENCE (4) …

Promoting Decent Work for All 15 Features of new system  Continued use of government mediators under regional autonomy  Industrial Relations Court comprised of panel of judges (career judge sits with ad-hoc judges from employers & unions)  Court has jurisdiction to adjudicate on “rights” and “interests” disputes THE INDONESIAN EXPERIENCE (5) …

Promoting Decent Work for All 16 Experience with new system  Most disputes settled at enterprise level or with assistance of mediators  Little use of private conciliation and arbitration  Problems with start up of new Court (appointments, resources, training)  Significant number of cases at Supreme Court: 213 cases in 2006 and 584 cases to August 2007  Some disputes involve informal mechanisms (e.g. Ministerial intervention; parliament; police; etc) THE INDONESIAN EXPERIENCE (6) …

Promoting Decent Work for All 17 THE INDONESIAN EXPERIENCE (7) … Some statistics YearNumber of Cases Number of Workers involved Working Hours Lost ,8451,165, ,325769, ,114648, ,326591, ,082766, ,7834,665,685 Strikes YearLabour DisputesEmployment Termination Cases ,160 (85,989 workers) ,445 (114,933 workers) ,394 (128,191 workers) ,386 (123,929 workers) 2005*921,784 (66,604 workers) ,615 (67,782 workers) Labour Disputes *As of October 2005 ** Labour disputes are disputes over normative and non-normative rights such as wages, overtime, bonus, trade union, transport and meal allowances, uniform, employment status, etc.

Promoting Decent Work for All 18 THE INDONESIAN EXPERIENCE (8) … OfficialsTotal Mediators1,084 Conciliators230 Arbiters64 Ad hoc Labour Judges228 Career Labour Judges101 Ad hoc Labour Judges at the Supreme Court8 Career labour Judges at the Supreme Court20 Dispute Settlement Officials (September 2007)

Promoting Decent Work for All 19 Some challenges  Understanding of collective bargaining and new system  Support through labour administration (e.g. inspection and mediation services)  Problems in establishing new institution (including issues relating to jurisdiction, workload, expertise and practice of courts)  Proper role for police THE INDONESIAN EXPERIENCE (9) …

Promoting Decent Work for All 20 THE INDONESIAN EXPERIENCE (10) … The ILO has assisted the labour law reform process and the operation of the new industrial relations system mainly through two projects: ILO/USA Declaration Police Training Project ILO/USA Declaration Industrial Relations Project

Promoting Decent Work for All 21 Some specific needs identified  Promotion of bipartite cooperation and dispute settlement  Improved inspection and mediation services  Training (parties, mediators, judges) THE INDONESIAN EXPERIENCE (11) …

Promoting Decent Work for All 22 IMPROVING DISPUTE RESOLUTION IN ASEAN COUNTRIES (1) … Indonesia’s experience in introducing new dispute resolution system highlights some of the challenges in developing countries in Asia:  Experimentation with new institutions (Cambodia, Indonesia) within model of government mediation services and adjudication by independent body  Weakness in labour administration and capacity of parties  Building and maintaining respect for new institutions (e.g. Philippines)  Promoting labour management cooperation and an understanding of collective bargaining  Defining the role of government and police in new system  Part of process of promoting harmonious industrial relations and labour management cooperation to enhance competitiveness and attract investment

Promoting Decent Work for All 23 IMPROVING DISPUTE RESOLUTION IN ASEAN COUNTRIES (2) … CAMBODIA  Arbitration Council established in 2003 as independent Forum for resolution of labour disputes  Tripartite structure with cases determined by a panel of 3 arbitrators (from government, employers and unions) selected by the parties  Collective labour disputes not resolved by a conciliator from the Ministry of Labour are forwarded to Arbitration Council  Arbitration Council can resolve “rights” or “interests” disputes through voluntary mediation and mandatory arbitration  Parties may opt for binding or non-binding arbitration  Estimated 68% of cases resolved through pre-arbitral mediation or through arbitral awards  ILO/USA/NZ Labour Dispute Resolution Project assisted with the establishment of the Arbitration Council

Promoting Decent Work for All 24 IMPROVING DISPUTE RESOLUTION IN ASEAN COUNTRIES (3) … VIETNAM (1) …  Significant number of wildcat strikes in recent years, especially in foreign-invested enterprises  1995 Labour Code created new legal framework of industrial relations (socialist market economy)  Labour Code grants right to strike & each enterprise has its own union, although all affiliated to Vietnam Confederation of Labour.  Mechanism for dispute resolution under the Code is by enterprise-level Conciliation Council with recourse to provincial level Labour Arbitration Council. However, once dispute or strike happens a joint task force of local Department of Labour officials and provincial union officials visit the factory and mediate the dispute.

Promoting Decent Work for All 25 IMPROVING DISPUTE RESOLUTION IN ASEAN COUNTRIES (3) … VIETNAM (2) …  Pressure to reform and improve current dispute settlement system with revisions to Labour Code Chapter 14 on Settlement of Labour Disputes in 2006  Consideration of role for local mediators (not government officials?) and workers’ and employers’ representatives in Arbitration Council ILO/Norway Industrial Relations Project; ILO Factory Improvement Project

Promoting Decent Work for All 26 IMPROVING DISPUTE RESOLUTION IN ASEAN COUNTRIES (4) … ASEAN Community is  Sharing experiences between countries, especially those with more developed systems (Singapore, Malaysia)  ASEAN Labour Ministers have established a Working Party to promote better industrial relations and progressive labour practices

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