Extreme Exploitation Based On Employment Contract In Indonesia, employment contracts can be entered into for a fixed or unspecified term. Fixed Term Contract (FTC) workers are contract workers, while Unspecified Term Contract (UTC) workers are permanent or regular workers. FTCs are given for a fixed time period or until the completion of a specific job. Such contracts can be renewed for a maximum period of two years*. After the completion of two years, FTC workers are converted into UTC workers unless their contracts are terminated. UTC contracts do not specify a time period for employment, and the employment continues until they are terminated. FTC contracts allow flexible work hours based on daily or monthly wage rates, and have less secure employment, as well as benefits associated with employment such as termination or seniority benefits, as compared to UTC workers. FTC workers fared worse than UTC workers in both LMW and HMW regions: • In LMW regions, FTC workers received an average monthly wage of 161 USD in 2020, which is 12% lower than UTC workers, who received 183 USD. • In HMW regions, FTC workers similarly *
Under the new Omnibus Law passed in October, 2020, FTCs can be renewed indefinitely
Figure 5.7: Monthly wages by contract type across minimum Figure 5.6: Monthly wages by contrac type across2020 minimum wage regions, 2020 wage regions, FTC
UTC
250 Monthly wages in USD
• In HMW regions, too, women workers experienced more significant wage theft than male workers, with their average monthly wages falling by 43%, from 267 USD in pre-recession period, to 151 USD by June 2020. By the end of the year, their wages recovered to near pre-pandemic levels. In comparison, male workers only experienced a 32% reduction in wages from 287 USD to 194 USD by May 2020. By the end of the year, their wages were 16% lower than the pre-recession period, at 247 USD.
235 210
200
183 161
150
100
50
0
Low Minimum Wage Region
High Minimum Wage Region
Source : Primary Data n = 390
reported 11% lower wages at 210 USD, as compared to 235 USD earned by UTC workers. The pandemic-induced recession increased the disparity between FTC and UTC workers. In the pre-recession period, FTC workers’ wages were close to or higher than UTC workers’ wages as they worked a high number of overtime hours to bring their wages to survival levels. • In LMW regions, the wages of UTC workers recovered to pre-recession wages by June 2020, and remained close to those levels throughout the year. On the other hand, FTC workers reported a significant wage theft of 40% in June 2020. By the end of the year, their wages remained 10% lower than the pre-recession levels at 169 USD. • In HMW regions, the wages of FTC workers declined steeply by 57% from 284 USD in the pre-recession period to 121 USD in June 2020. In comparison, the wages of UTC workers declined only by 30% from 270 USD to 188 USD in the same period. UTC workers’ wages recovered to almost pre-recession levels by the end of the year, while FTC workers’ wages remained 18% lower than pre-recession levels. 74
