Better Work Programme in Indonesia - stage III

The Project aims to improve working conditions and productivity in targeted employment-intensive sectors by improving compliance with international core labour standards and Indonesian labour law. In tandem, the project will promote productivity and competitiveness of enterprises linked to the Indonesian global supply chain. The first phase of the Project was conducted from July 2010 to June 2012; and the second phase is ongoing from July 2012 to February 2017.

Project background

Indonesia is one of the world’s leading exporters of textiles and apparel products. This industry contributes significantly to the country’s economy, providing over a million jobs and is a major source of earnings. The Indonesian apparel industry is growing at over 8 per cent per annum, as garment factories move from China to Indonesia and other countries in the region. This has resulted in major brands sourcing more garments from Indonesia.

At the enterprise level, the benefits of a growing industry have often not been shared with workers who are struggling with job insecurity and short-term contracts. Unregulated outsourcing, non-compliance in the payment of minimum wages and lack of workplace cooperation has led to deteriorating working conditions.

At the same time, international buyers/brands are increasingly demanding their suppliers to integrate labour standards compliance into production processes, as part of their business ethic. To ensure compliance the brands have been auditing their suppliers working conditions. As a result, each brand is duplicating the same auditing efforts against different codes of conduct. This approach is not only expensive and inefficient but also generates confusion in the interpretation of international labour standards and national labour law.

Among actors involved in global supply chains, there is strong consensus that compliance with labour standards is critical to business success. However, auditing alone does not lead to sustainable improvements in the workplace. Management and workers need to work together to address non-compliance to the labour standards. There is a necessity to adopt an integrated approach involving national governments’, workers’ and employers’ organizations as well as international buyers.

Better Work programme

Better Work Indonesia is a partnership between the International Labour Organization (ILO) and the International Finance Corporation (IFC). The programme aims to improve compliance with labour standards and promote competitiveness in global supply chains. Better Work focuses on scalable and sustainable solutions, through strengthening cooperation between governments, employers’ and workers’ organizations and international buyers. The protection of workers’ rights and entitlements helps distribute the benefits of trade to promote human, social and economic development. Compliance with labour standards can assist enterprises to be more competitive, by improving access to new markets and buyers.

The Better Work programme builds on the experience gained the ILO’s Better Factories Cambodia project, which has not only successfully improved working conditions and compliance with labour standards, but has also increased competitiveness through monitoring factory-level remediation and training.

Better Work Indonesia combines independent enterprise assessments with advisory and training services to support practical improvement through workplace cooperation. Using a specially designed online information management system, factories can share assessment and remediation information with their buyers. This in turn allows buyers to reduce their own auditing and redirect resources to fixing problems and focusing on sustainable solutions.

Project objective

To improve working conditions and productivity in targeted employment-intensive sectors by improving compliance with international core labour standards and Indonesian labour law. In tandem, the project will promote productivity and competitiveness of enterprises linked to the Indonesian global supply chain.

Duration

Phase I: July 2010 – June 2012 (2 years). The Phase I was funded by the Australian Agency for International Development (AusAID), the Netherland Ministry of Foreign Affairs and GIZ.

Phase II: July 2012 – February 2017 (5 years).

Phase III: 1 January 2016 – 31 December 2018, funded by the Swiss, Dutch and Australian governments as well as by revenue from buyers and factories and, potentially, new donors.

Key partners

  • Ministry of Manpower and Transmigration
  • Ministry of Trade
  • Ministry of Industry
  • Ministry of National Development and Planning
  • Indonesian Employers’ Association (Apindo)
  • Indonesian Textile Association (API)
  • Trade Unions
  • International Buyers

Beneficiaries of the project

Beneficiaries include governments, workers, enterprises and buyers in global supply chains. Benefits gained through participation in Better Work Indonesia may include:

Enterprises

Increased market access through demonstration of labour standards compliance to international buyers, enhanced reputation through commitment to improvement process, reduced worker turnover, and fewer audits.

Workers

Better protection of worker rights, more accurate payment of wages and improved working conditions.

Governments

Export growth through increased market access, a stronger reputation for safer investment and improved capacity in labour administration.

Buyers

Reduced audit burden and increased focus on long-term improvement, interaction with national government and workers’ and employers’ organizations and demonstrable contribution to better working conditions.