ABSTRACT
This chapter starts with an introduction of Indonesia's post-1945 economic development and labour relations, and examines the country´s main labour market features: formality, informality, and inequality. The development of the Gini coefficient, the most commonly used measure of income inequality, indicates Indonesia's stagnation on road to more equality. The widespread violations of trade union rights by employers have most likely contributed to decreasing union coverage. The Indonesian statutory minimum wages formally cover all employees except domestic workers. The Widodo administration aimed to “depoliticise” wage-setting through the 2015 minimum wage fixing reform. The relationship between minimum wage setting and collective bargaining is of major importance. Successive Indonesian administrations would have liked to turn minimum wages into a genuine wage floor, while dominant forces in these administrations have been reluctant to leave wage-setting to free collective bargaining. The chapter concludes by considering the prospects for Indonesia's system of “Isolated minimum wages”, in particular regarding steps towards more free and effective collective bargaining.
