Would Indonesian State (Government) be a ‘Model Employer’?

In the previous term, I was asked to discuss about whether the state (in the UK) can be a model-employer or not. As I had no classes due to lecturers’ strike, I then tried to apply the same question to Indonesian context, but focused on civil service institution:

In employment relations context, the state is not as a single actor but is an ‘open system’, as it consists of various powerful actors with different function and purposes to carry out the government’s planning (Dundon and Rollionson, 2011: 168). The way the state becomes an important actor in employment relations is because the state produces laws which shape how employers and employees (with its associations) as the ‘rule of the game’ (Dundon and Rollinson, 2011: 168). Aside of a rule-maker and legislator, Dundon and Rollinson (2011: 170) further describe some other roles of the state in employment relations including a regulator of incomes and prices, an economic manager, promoter of social citizenship guidelines, a protector of standards, and an employer of its own right. This writing will focus on the role of the state as an employer in its own right. By saying that, Dundon and Rollinson (2011:170) emphasize that ‘as an employer, the state can set the standards of employment practice’.

My discussion focus here is more on civil service rather than state-owned enterprise. They’re both different in nature, as the state-owned enterprise would also focus in gaining profit; which then, most probably applying more contemporary HR management/new-public management/private-like management.

The role of states as a regulator and at the same time an implementer (as employer or work contractor) of employment law pushes it to keep some balances between their law products and their own reaction towards it. As such, some political agenda, the ideology, and believes of the leaders would influence the employment laws produced by the ruling government which somehow makes degree of uncertainty or instability in employment.

Anyway, various surveys resulted a list of organizations as best or model employers in Indonesia have been released by some institutions. Although private sector was dominating, it is interesting to see that some public sectors in Indonesia were also listed. A Sweden based global employer branding research firm, Universum, listed some state institutions, such as Ministry of Foreign Affairs, Ministry of Finance, and Ministry of Tourism as big 10 of the most attractive employers in the Indonesia. It’s interesting that Ministry of Manpower, which has the ‘biggest responsibility’ on the ‘working regulation/policy’ was not listed.

Some characteristics of good, best, or model employers were designed by some firms (e.g. Universum, Glassdoor, Bloomberg, etc.) in making the list based on various concerns. As I am studying in the UK, it might be interesting to see what happened here as well. The British government was aspired to be a ‘model employer’ with some characteristics: aside of offering the best pay rates, to become a model employer, the state is also aspired to be able to ensure job security and its stability, and to employ a fair employee representation for consultation of remuneration and work conditions of its employees (The Priestley Commission, 1953-5 in Carter and Fairbrother, 1999). In 1995, the concept aforementioned was expanded to address gender pay gap.

In short, in the UK, many literatures show some working conditions in public sector (civil servants) that seems better than private sector. Some conditions such as better pay than the private sector and its pension scheme, still become a significant consideration which makes civil service/public sector institutions became one of ‘attractive employers’ in the market, despite of speculations that private sector might be able to offer better pay rates in the near future. Seeing the historical journey, especially after the Margaret Thatcher’s era, which privatization and ‘economic reform’ happened, Carter and Fairbrother (1999) argue that the previous concept of state as a ‘model-employer’ was ended. Further, it has been said that ‘model employer’ concept was gradually replaced to follow conditions in market, which recently named ‘economy, efficiency, and effectiveness’ concept, and lately as ‘best value’ as well as ‘best practice (Carter and Fairbrother, 1999).

Thus, as mentioned earlier that some conditions of wages, stability and job security, gender pay gap, and industrial relations needs to be improved to certain standards, it is unlikely to say that state in the UK has been acting as a model-employer so far.

Illustration: State Buildings (Personal Collection)

Now, let’s try to take a look in Indonesia’s situation using the previous characteristics of ‘model-employer’ that UK used: offering the best pay rates (and pension), ensure job security and its stability, employ a fair employee representation for consultation of remuneration and work conditions of its employees, and lastly gender pay gap.

Offering the Best Pay Rates (and Pension)

Looking at the salary structure of Indonesian civil servants (the version that I accessed HERE – please advise if you find the newest one), it seems that some private sectors entrance level in Jakarta would have better number than some of these layers. Yet, these numbers are only the base salary in which the civil servants have also some other statutory allowances. The base salary of a high level national/multi-national private sectors employee might be higher than a high level civil servants; yet with the allowances that the civil servants receive, the story might be different in some cases.

I am not sure how the civil service institutions do their salary survey or detail conciliation process to determine salary increase (aside of states’ financial condition and its projection), yet it’s reported that the base salary did not increase since 2 years ago (read HERE). Some news recently informed that the government plan to increase the salary and change its structure, which some degree of ‘performance management’ will be included (see HERE). Also, it’s just being reported that the pension scheme fee will be increased by 10-15% (see HERE); which means that the amount of pension for civil servants will increase as well. For private sectors employee, however, the government provides a welfare system and pension scheme under ‘BPJS’ with 5-6% monthly fee/contribution since 2016, and apparently will increase to 8% later (read HERE).

Ensure Job Security and Its Stability

I personally have never heard such a massive lay-off/redundancy of the Indonesian civil service. Yet, in 2016, the Minister of National Apparatus Empowerment and Reformation of Bureaucracy informed that the ideal amount of civil servants is 1.5% from the population. He explained that current Indonesian population is about 250 million, it means that the ideal amount of civil servants shall be around 3.5 million. In fact, in 2016, he said that Indonesia has 4.5 million civil servants. The 1 million surplus created rumors of lay-off/redundancy (see HERE).

Nevertheless, the handbook of Indonesia civil service management ensures that when it needs to be structured, the civil servants will firstly be transferred to another institution, if available (read page 108 HERE). It sounds like a pretty safe situation, doesn’t it? Yet, various circumstances might cause a civil servant being transferred to another institution without proper notifications and preparations. Thus a common jargon among civil servants would be “ready to serve (the country) anywhere”. The most heard problem in this circle of employment might be that many civil servants are in a short-term contract (that most probably continuously renewed) which positioned them to receive monthly fee, lower than the average civil servants’ wages; or named as “honorer” civil servants.

Employ a Fair Employee Representation for Consultation of Remuneration and Work Conditions of Its Employee

I saw some grievance manifestations through mass demonstration and picket lines from civil servants on some cases; one of the issues was about aforementioned “honorer” case. However, the only union for civil servants that I have ever heard is KORPRI (Korps Pegawai Negeri Republik Indonesia) / Indonesian Civil Servants Coop which firstly founded in 1971. Based on its mission statements, KORPRI also aims to provide prosperity for its members (statement number 3 – read page 8 HERE).

In regards to KORPRI’s programs and its relation to consultation of remuneration and work conditions of its employee, most of the programs are focusing of external orientation program (such as building a hospital etc.); and only 1 consultation to the government, which is about religious holiday allowance (see page 9-12 HERE). The wages numbers were also given by the government, I suppose, designed by a chosen team without any fair consultation with civil servants. Well, it actually happens as well in lots of private companies in Indonesia where employee representation is not well valued. However, in order to be a good model, I guess civil service institutions shall be giving examples on how this fair employee representation and consultation being done.

Gender Pay Gap

In general employment, the gender pay gap in Indonesia reported by ILO was narrowed from 40% in decades ago to 19% in 2016 (see HERE). One factor of this ‘good news’ might be the increase of minimum wages in manufacturing industries lately, as reported by World Bank (read full HERE). However, it is interesting to see the report of gender pay gap from the Asian Development Bank in 2014 that public administration has 33% gender pay gap between male and female (see page 31 HERE).

Seeing those data, it somehow implies that female workers most probably are yet to get opportunities to be in higher level/layers in organizations, which allow them to earn more money. Gender pay gap data is only a glimpse, a top of an iceberg, which contains lots of challenges from equality (towards opportunity), women empowerment, stereotyping, etc. Thus, seeing the fact of 33% gender pay gap in public administration, shows that the government has lots of ‘homework’ to do in terms of this issue.

Other Aspects and Conclusion

I believe there are some other aspects we can see further to define a ‘model-employer’ these days. In this particular context, some indicators like, whether civil servants receive equal opportunities to learning and development process (or in contrast, experiencing ‘de-skilling’), whether civil servants well-being in working are well-managed, etc. However, in this writing, looking at 4 categories above: offering best pay rates, ensure job security and stability, employ fair employee representation, and gender pay gap; as well as putting those aspects in political tensions as part of the government which produces employment law and needs to implement it; the Indonesian state would be hard to be an ideal model employer.

Wait, but why the admission number for being part of civil servants were so high? I guess you have the answer for this?

@yosea_kurnianto

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