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Indonesian Palm: Ensuring Labour Sustainability

The Indonesian Palm Oil Association (GAPKI) and the International Labour Organisation (ILO) jointly held a recent event focusing on compliance with Indonesia’s labour laws. It included perspectives from both the government inspection side, and from the private sector. 

This event is part of a long-term collaboration between Indonesian institutions, and the ILO – as well as other international bodies committed to protecting and improving labour rights in the agricultural sector.

ILO is currently running a major program, ‘Advancing Workers’ Rights in Indonesia’s Palm Oil Sector’, with collaboration from GAPKI (the Indonesian Palm Oil Association), the Indonesian Government and trade union groups. The program is indicative of the proactive commitment of the Indonesian palm oil community to improve labour rights and conditions for the palm oil sector across the board.

Anyone familiar with the Indonesian labour context knows that it is complex. Geographically, the country’s population is dispersed between thousands of islands. Many agricultural work settings are informal, managed jointly between communities, or in the case of smallholdings, run by families. Awareness of changes to regulations can also be patchy and therefore problematic.

These settings make two things difficult: compliance and inspection. Both of these were discussed by the GAPKI-ILO panellists.

Ensuring Compliance

So what are the compliance challenges?

Tri Djatiningsih, a government labour inspector from the West Kalimantan, noted several key points.

First, child labour and forced labour is not a problem in West Kalimantan. This is a very positive situation given the current emphasis on addressing child and forced labour globally, including on oil palm plantations, by US authorities.

Second, the most pressing issue is around non-utilisation of online employment reporting. This requirement was introduced in 2017. The system effectively provides a portal for companies to comply with labour laws. But, internet penetration in rural Indonesia is relatively low, only around half that of urban areas.

Consequently, other areas of compliance such as correct wage payments, social security regulations and written agreements or arbitration tend to fall by the wayside.

Again, this isn’t surprising, there are around 40,000 microenterprises registered in West Kalimantan, compared with around 600 small enterprises, and even smaller numbers of medium and large enterprises. Microenterprises have assets of less than USD4000 – and are therefore likely to experience capacity and resource constraints for compliance.

It’s therefore also not surprising that other requirements – such as occupational health and safety (OH&S, referred to as ‘K3’) compliance is also left wanting.

Enforcement

Inspection for enforcement is similarly difficult in the Indonesian context, and has been further compounded by COVID. For example, the distance between two of West Kalimantan’s largest cities – Pontianak and Sintang – is just 300 km, but by road the journey can take 7 hours. Last decade it was reported that inspectors were only able to inspect around 1 per cent of businesses; although the government has significantly increased inspection budgets, there is still a gap.

Private Sector Moves to Close the Gap

For the private sector, it is therefore not surprising that the country’s largest export-oriented firms have undertaken their own initiatives in order to ensure compliance with both local and international standards on labour and related questions. Fauzan Kurniawan from Sinarmas, one of the country’s largest palm oil processors, gave an overview of the initiatives undertaken by the company. These included collaborations with workers, worker groups, NGOs and customers, such as:

  • Human rights impact assessments with the Danish Institute for Human Rights and Nestle;
  • Labour risk assessments with Verite, Earthworm Foundation, and Nestle;
  • Supplier workshops on responsible employment with RSPO
  • Multistakeholder dialogue and workshops on child labour and informal labour in East Kalimantan;
  • Action plans for ongoing improvement.

For larger companies that might have multiple suppliers, ensuring upstream operations and partners are also in compliance remains a challenge that the companies must take on themselves, via online initiatives and learning materials. 

Role of ISPO

In addition, certification through ISPO (Indonesia Sustainable Palm Oil) requires companies to not only meet Indonesia’s labour requirements, but also take additional compliance measures in order to gain certification.

ISPO in particular demonstrates a strong commitment not only to the principles that underpin labour rights discussions globally – but also to the principle of ongoing improvement and progress. The ILO partnership is part of this effort, as is the Indonesian government’s consistent focus on, and prioritisation of, the UN Sustainable Development Goals (UNSDGs). U.S. authorities have recognised these concrete commitments and actions in their reporting on Indonesia.

It is well understood that agriculture in Indonesia – and globally – faces challenges in terms of ensuring that workers receive the treatment and benefits that they are due. Indonesia is not perfect, and no country is. However, the collaboration between industry, government, NGOs and international organisations is putting Indonesia on the right path.

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