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Labor Rights in the Indonesian Palm Oil Sector: The Sustainable Path

Labor and human rights are the new defining issue for the palm oil sector globally, as we look ahead to 2022.
 
Governments and customers have made it clear: they will not tolerate forced labor or child labor in their supply chain. Increasingly, strong labor standards are becoming a requirement for the supply chains of global commodities.
 
In the U.S., some products accused of being linked with forced labor – including commodities such as palm oil – are being stopped at the border and refused entry to the U.S. market.
 
In Europe, the Commission is preparing a new Due Diligence regulation focused on labor rights (known as the Sustainable Corporate Governance proposal) – following on from the existing EU Due Diligence regulation that focused on deforestation, published in November 2021.
 
In many respects, labor rights transcends the environmental and deforestation arguments that have been repeatedly raised by Western activists and European governments, and debunked time and again with facts.
 
The Indonesian palm oil community takes the issue of labor and human rights seriously.
 
Last month, the Jakarta-based think-tank, the Institute for Development of Economics and Finance (INDEF) held a webinar in conjunction with government officials, private sector leaders and civil society on the topic of labor rights in the Indonesian palm oil sector. The webinar, along with the release of a new report by INDEF, highlights the progress made by Indonesia’s palm oil community as well as the ongoing labor challenges faced by the sector.
 
Labor Laws & Regulations
 
Over the years, Indonesia has shown a strong commitment to improving labor conditions through government laws and regulations, as well as the private sector’s commitment to international and multi-stakeholder standards.
 
The INDEF paper and event outlined how the government of Indonesia is focused on ensuring labor rights protection primarily through labor laws and regulations, and the expansion of the healthcare security (BPJS kesehatan), and the employment social security (BPJS ketenagakerjaan), which covers pension, old age benefits, death benefits, and accidents at work. It also aims to address labor issues concerning occupational safety and health (K3), child labor protection, freedom of association, and labor inspection.
 
Indonesia also has a longstanding cooperation with international organizations and development partners such as the ILO, the U.S. Department of Labor and the Netherlands. This has resulted in the adoption of Decent Work standards for the palm oil sector.
 
As highlighted by the keynote speaker, Ibu Indah Anggoro Putri – the Director-General for the Ministry of Manpower – in her speech, “To maintain palm oil’s competitiveness in the global market, the government and stakeholders are working collectively to improve Indonesia’s labor conditions through rights protection and the adoption of Decent Work standards.”
 
Bapak Sumarjono Saragih, the Deputy Chairman of Labor Affairs of GAPKI reiterates “The importance of strategic collaboration between cooperative, farmers and workers association, and the entire supply chains cannot be stressed enough. This also includes casual workers, truck drivers, and small and medium businesses.
 
Women and Child Rights
 
GAPKI is also working with private stakeholders and labor unions to advance key labor issues such as the protection of women and children. This includes several collaborations including the launching of a practical guidebook on women workers’ rights and protections, which aims to promote equal opportunities, and protection at work, and share best practices of palm oil companies in line with the Decent Work framework.
 
The Indonesian palm oil community has a strong commitment to end any child labor in plantations. This initiative is supported by the Ministry of Labor, as well as the ILO. Together, the palm oil community and the government plan to announce concrete programmes across Indonesia’s seven main palm oil producing provinces (South Sumatra, North Sumatra, West Kalimantan, East Kalimantan, Central Kalimantan, Jambi and Riau): these are aimed to ensure that 2022 will be the year that ends any lingering child labor on plantations.
 
The ILO’s Country Director for Indonesia, Michiko Miyamoto, expressed his appreciation to Indonesia’s oil palm plantation companies for these efforts, stating “I appreciate good initiatives including good progress in eliminating child labour. Today, I welcome progressive collaborative steps led by the Ministry of Manpower and various relevant stakeholders as well as other relevant civil society organizations and employers, in this case GAPKI.”
 
GAPKI is also working with multiple ministries such as the Ministry of Women’s Empowerment and Child Protection (PPPA) on a pilot project to build childcare and women’s facilities at plantation sites. The pilot project, Rumah Perlindungan Pekerja Perempuan (RP3) also incorporates leadership capacity building activities such as Sawit Ramah Perempuan and Anak.
 
Compliance and Safety at Work
 
The INDEF event also examined how the Indonesian government aims to address the issue of employment status – specifically on the contract mechanism for casual workers and fixed-term employment workers (PKWT). The implementation of OSH – notably the impact of pesticides on workers and accidents during operation and production – was also highlighted, along with the need to ensure labor inspections can enforce compliance with regulatory labor rights protections.
 
Ibu Indah emphasized that “given the limited access to workers due to the remote location of plantations, companies must ensure adequate healthcare service and facility on site, provide work safety equipment, OSH training and protocol guidance, and improve agricultural technologies to minimize work accidents.”
 
Mr Yunirwa Gah from ILO, another contributor at the INDEF event, spoke about the importance of investing in institutional capacity building for labor unions, strengthening the network of farmers’ organizations and improving workers’ collective bargaining and negotiation skills.
 
Bapak Tauhid Ahmad from INDEF, agreed with this perspective. He concluded that the forthcoming economic recovery from the pandemic, coupled with the current wage trend i.e., high variance across regions, means the government must enforce strong law enforcement of minimum wages and ensure access to social security for all workers.
 
The International Perspective
 
We are now witnessing consumer countries imposing regulations with more stringent labor standards, and NGOs demanding stronger labor requirements for the commodity supply chains in producing countries.
 
This new focus on labor (rather than the historic focus on deforestation) is an opportunity for Indonesia to demonstrate its commitment to labor rights protection through ongoing implementation of national standards notably through ISPO certification system, and cooperation with other international standards and bodies, such as ILO. 
 
The ISPO principles and criteria include strong requirements for adherence to national labor laws and regulations – this includes the requirement that labor standards are aligned with international standards and norms. For example, the ISPO certification requires plantation owners to give workers access to organised labor groups, and also to facilitate meetings between the employer and labor groups.
 
Indonesia is therefore in a strong position to show the international community that ISPO is key to ensuring labor rights protection in the Indonesian palm oil community. The standards and regulations in place at the government level – especially ISPO – can give guarantees to international customers that Indonesian palm oil meets the standards demanded on labor rights now and into the future.

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