Introduction

Unions play a central role in shaping Indonesia’s industrial relations. For foreign employers, understanding how unions function and how Collective Labor Agreements (Perjanjian Kerja Bersama – PKB) work is essential for compliance and effective workforce management.

Real Case: Strikes at Freeport Indonesia

In 2011, Freeport Indonesia, one of the largest mining companies in Papua, faced a prolonged strike involving more than 8,000 workers demanding wage increases. The labor union led negotiations, and after months of disputes, a new Collective Labor Agreement was signed that significantly raised wages. This case showed how unions, when supported by strong collective action, can influence business operations and enforce fairer terms for employees.

How Unions and PKB Work

• Right to Unionize: Employees have a constitutional right to form or join unions (Law No. 21/2000). Employers must not interfere or retaliate against union activity.
• Collective Bargaining: When a union is established, it can negotiate a PKB with the employer. The PKB sets terms such as wages, working hours, leave, and dispute resolution.
• Legal Force: Once registered with the Ministry of Manpower, a PKB is legally binding on both employer and employees.
• Employer’s Role: Foreign employers should approach unions with transparency and respect. Attempting to block unions may lead to sanctions or court disputes.

Why This Matters for Foreign Employers

Constructive engagement with unions reduces the risk of strikes and litigation. Many multinationals in Indonesia maintain strong partnerships with unions, finding that open dialogue fosters trust and creates a more stable operating environment.

Conclusion

Unions and PKBs are not barriers to business but frameworks for collaboration. For foreign employers, embracing these institutions helps ensure compliance, fairness, and long-term workforce stability.

References

• Indonesian Constitution 1945, Article 28E.
• Law No. 21 of 2000 on Trade Unions.
• Law No. 13 of 2003 (as amended by Law No. 11/2020) on Manpower.
• Ministry of Manpower Regulation No. 28 of 2014 on Registration of Collective Labor Agreements.
• Jakarta Post (2011). Freeport strike ends with wage deal.