Indonesian Workers and Global Crisis
The key to preventing future chaos is to create an inclusive economic system that offers equal opportunities to everyone, and at the same time focuses on cooperation to manage energy and save the earth.
The threat of an economic crisis looms for 2023. However, facing a crisis is not simply about hardships to cope with but how to build resilience to find opportunities.
As mentioned by the Organization of Economic Cooperation and Development (OECD) in 2019, economic crises historically provide time for industrial renewal. Companies that are used to being wasteful and not innovative will be punished to bankruptcy early, but companies that are dynamic will survive and thrive.
This is called creative destruction, which gives birth to the engine of long-term efficiency in the market economy and subsequently turns a crisis situation into strongly founded economy. As showed in past experiences in the OECD member countries, companies proved to be able to increase post-crisis efficiency and create a new business models with new technology with efficient production costs.
Examples can be seen from the emergence of various low-cost airlines, which came up and developed during a crisis when inefficient old players went bankrupt or stepped back. This opened up market opportunities for new players, which were more efficient and innovative.
Another example is the trend in online business, which grew rapidly during the crisis due to the COVID-19 pandemic.
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In the case of Indonesia, the problem is actually simpler than in OECD countries, where innovation, efficiency and productivity are imperative to ensure sustainable economic growth. In our country, even though these conditions are important, the economy can still grow because consumption contributes to the engine of economic growth. Increasing consumption is the only hope for Indonesia to avert the crisis.
In summary, if you want to survive, the government and the private sector must continue to spend money to maintain consumption. Government social assistance programs that were initiated during the pandemic, such as the direct cash assistance (BLT) program, fuel subsidies, basic necessity packages and the Family Hope Program (PKH), deserve to be maintained.
Where does the money come from? Of course, it’s from medium or long-term foreign loans with a view to bringing economic security first during a crisis. After all, payments can be made after the crisis is over.
Survivability
Since the 1998 economic crisis, Indonesia has often been hit by crises reverberating from the global economic crisis. However, Indonesia has always escaped the trap of a prolonged crisis. Other countries took a long time to recover. Some even failed to get out of the crisis, such as Venezuela and Sri Lanka.
The pandemic is the latest evidence that Indonesia is one of the few countries that can recover from the crisis more quickly.
In fact, during the crisis, Indonesia's economic growth was one of the highest in the world. Many put it down to Indonesia's solid macroeconomic foundations. There are also those who argue that it is attributable to President Joko “Jokowi” Widodo's massive social assistance programs.
Based on empirical experience for decades, Indonesian workers have mitigating aptitude against a crisis.
However, not many have related it to the high rate of Indonesian workers’ survivability. Probably being used to poverty-related hardship, Indonesian workers do not find it difficult to adapt to a new bout of hardship, coupled with the fact that we have ingrained the culture of helping each other.
This factor often becomes an automatic economic stabilizer when faced with adverse situations. In the case of the OECD, the automatic recovery tool is known as social security coverage because almost all of the member countries are close to achieving 100 percent social security coverage.
In Indonesia, when a crisis occurs, people do not immediately put the blame on or protest against the government, but the first thing they will do is ask friends, neighbors, family and socioeconomic gatherings (like the one locally known as arisan) for bailouts. Based on empirical experience for decades, Indonesian workers have mitigating aptitude against a crisis.
Indonesian workers seem to have a great instinct to adapt. They seem to always have ideas for alternative or additional income when they are laid off.
Their survivability lies in the fact that they are, first, able to change professions quickly even if they should end up in unskilled work sector. Second, they are able to survive on meager incomes.
The national labor structure is largely made up of informal workers, who account 58 percent, and those categorized as vulnerable workers or non-standard forms of employment (NSE), who constitute 25 to 30 percent. They may perceive the potential future vulnerability they are facing, so intuitively they have an emergency backup plan in a case of crisis.
As a result, when the Jokowi administration launched a social assistance program for work severance victims, even though the sum was only Rp 600,000, the impact was significant with it being able to help people's economic resilience. Various modes of mitigation pursued by laid off workers include looking for work in the informal sector, home business with family, reducing living costs by temporarily sending family members to the village, becoming motorcycle taxi drivers, working in traditional markets, seaports or entertainment public spaces.
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There are also those who try their luck at becoming migrant workers. The point is that in the absence of government wage subsidies, Indonesian workers can tweak themselves to find own livelihoods for their subsistence. This is something their compatriots in developed countries or the OECD cannot do. It may be because they are used to being comfortable with the state welfare system.
However, the above adaptation patterns generally only apply to generation X (born in 1977-1994). If those from Gen X are laid off, they will try to return to work in formal sector. Meanwhile, if millennials or those from Gen Z (1997-2012) are laid off, they are not interested in looking for a bonded work relationship. They are more inclined for a flexible work system, without formal work bond. So how the millennial group mitigates the situation is different from the previous generation.
Based on the 2020 Population Census, Gen Z constitutes the largest proportion of Indonesia's population, which is 27.94 percent of the total population (BPS, 2021). This is referred to as the creative generation or digital native (Pineda, 2020), which grows along with the development of digital technology. They work not to earn money, but to fulfil passion.
They will rather quit their job than be unhappy at work. The millennial generation do not let themselves be bogged down on one workplace or profession. They prefer to explore other fields that are new and trendy. This is mainly driven by the incessant flooding of content on social media. It quite often showcases the success story of young people that arouses millennials’ psychological pressure to follow in the footsteps. They are willing to reap success quickly.
Jobs that are seen as slow and tedious will be abandoned. They want to do everything simply and quickly. Nor do they bother to beat around the bush.
Two generations, two solutions
Given the background of the Y and Z generations above, the solution for jobs for Indonesian workers should not be with just a general scenario, but specifically two scenarios. For the generation interested in formal jobs, it may be more relevant to give them expertise and up-skilling training that can be accommodated in new employment market.
Meanwhile, the millennial generation tends to forgo formal training for economic facilities that are cheap, easy and fast to get into business. This is in line with their work area in the digital sector, the majority of which are content creator, influencer and digital marketing start-ups.
They will find their own work without them having to go through formal training. A strong millennial networking system allows them to learn quickly from the right mentors they choose. This is what Shoshana Zuboff describes in the introduction to her book, The Age of Surveillance Capitalism. She says, “We either do more work for intelligent machines, or we have more smart people around the machines.”
So it is different from training in vocational training centers (BLK), where the majority cannot be used in the employment market after being trained for several months.
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The tendency of the millennial generation to begrudge formal, bonded jobs has for some extent disrupted the 20th century’s theory of job protection that sees the importance of industrial labor relations to provide guarantees for a better life for industry players, government, employers and workers.
Flexible working forms have become the most commonly used forms worldwide in the last two decades.
According to data at the International Labor Organization (ILO), the flexible employment includes nonpermanent workers, part-time workers, daily workers, multiply employed employers and workers with disguised employment relationships.
This system had been vehemently opposed by the trade unions, arguing that it places workers into indecent work conditions. Meanwhile, employers say that a flexible work system is a necessity in economic globalization.
The problem is that the employment standards that require employment relations as regulated by law are not in line with the needs in the globalized economy, which requires fast and cheap workforce recruitment and in their replacements alike.
The employment standard has been quickly pushed into periphery with the emergence business workers on online platforms. The employment market is increasingly disorganized. According to international data, flexible employment is generally found in the service sector, such as hotels and restaurants, wholesale and retail trade (8-34 percent), the manufacturing industry (6-16 percent) and construction (15-30 percent).
Apart from the pitfalls in many ways, the flexible employment system has its advantages. Some of the positive things that this system contributes are that it opens up broad job opportunities, provides work experience to novice workers, facilitated working from home, as well as reducing production costs and unemployment.
Some experts mention the positive impacts of this flexibility system. Haidt (2006) says in an extreme way that maintaining employment in vulnerable work hours may contribute to a decrease in unemployment. The opportunities this system creates are too great to be ignored.
The key to preventing future chaos is to create an inclusive economic system that offers equal opportunities to everyone.
Even if an imbalance arises, it is better to find a solution than to banish the idea in refusal to this system to grow. Some of the negative sides that arise from this flexible system, such as reduced wages, the absence of social security, lack of career and job protection, must be compensated for by creating an inclusive employment market.
The principle that everyone has the right to a decent job must be upheld. The target of achieving universal social security coverage should be pursued, the school education curriculum revamped to increase productivity and decrease unemployment.
The key to preventing future chaos is to create an inclusive economic system that offers equal opportunities to everyone, and at the same time focuses on cooperation to manage energy and save the earth.
Rekson Silaban
Analyst at the Indonesia Labor Institute
This article was translated by Musthofid.
