Archive for July, 2007
MANPOWER MINISTER’S SUPPORT IN LABOR STRIKE AGAINST NIKE CREATED INDONESIA’S BAD IMAGE IN GLOBAL ECONOMY
BY Beni Bevly
On July 16, 2007 there was a labor strike against PT Nike Indonesia that involved thousands of employees from PT Naga Sakti Paramashoes (NASA) dan PT Hardaya Aneka Shoes Indonesia (HASI). This strike took place in front of Bursa Efek building in Jakarta, where PT Nike Indonesia that lead by John Richard leases its office (Nike Dituntut Bayar Pesangon, Tempo Interaktif, Juli 17, 2007). The employees of NASA and HASI demanded PT Nike Indonesia to provide them with severance pay or termination pay due to the termination of shoes order contract as of March 2008. This demand was also supported by Indonesia Manpower and Transmigration Minister, Erman Suparno. The questions are: is it correct decision for Suparno as a minister of Indonesia who carries Indonesia name to support this demand? What is the impact to Indonesia reputation in global economy?
Let us analyze this issue carefully. First, the contract is between Nike Indonesia and Hartati Murdaya, the owner of the NASA and HASI. The contract, of course, includes the production of shoes that has to meet certain standards, such as policy and procedure, price, quality, quantity and delivery time which must be fulfilled by both parties. In this case, Nike Indonesia does not deal with Murdaya’s employees.
Second, Murdaya, through her two companies had breached the contract. According to the Director of Nike Indonesia, Erin Dobson, the termination was caused by those two companies failed to maintain the minimum quality standard of the products and the delivery date. Dobson mentioned these issues had been addressed before. “It has been two years, the delivery of the products are rarely on time,” he said. Even Indonesia Industry Minister, Fahmi Idris admitted between Nike Indonesia and those companies had been dealing with these issues.
Understanding the above issues, it makes sense for Nike Indonesia to terminate the contract. Form Murdaya’s side, instead of showing the improvement in quality and service to Nike Indonesia, she mentioned to the media, “Nike has been arrogant.” She also mentioned that her companies had been humiliated and employees knew about it.” According to her, Nike should terminate the contract 18 months before with HASI dan 30 months before with NASA. She denied that she mobilized her employees to strike against Nike Indonesia.
Beside Murdaya, Indonesia Manpower and Transmigration Minister, Erman Suparno said, “PT Nike Indonesia must take the responsibility in rescuing 14,000 employees from NASA dan HASI who are threatened from getting laid off.”
On the other side, Indonesia Industry Minister, Fahmi Idris mentioned that the lay off case is the responsibility of Murdaya’s because so far Nike does not have relationship with her employees.
Recalling the above questions, is it the correct decision for Suparno as a minister of Indonesia who carries Indonesia name to support Murdaya dan her employees demands? What is the impact to Indonesia reputation in global economy?
By looking at the contract, it is obviously wrong to support Murdaya’s and the emplyees’ demand. In this case, Murdaya should have fulfilled all the requirement in the contract. The employees themselves should have demanded the severance pay or termination pay from Murdaya, not from Nike, simply because Nike is not their employer and their actual employer is Murdaya who had allegedly breached the contract.
From global economy perspective, the labor strike, Murdaya’s action and Indonesia Manpower and Transmigration Minister, Erman Suparno’s reaction have created bad image on Indonesia economy. How come, the employer is the one who breached the contract, and it is obvious that Nike is not the employer of 14,000 employees, yet both employer and employees demand severance pay from Nike?
Nowadays global economy, most country, such as China, India and Vietnam fight to get their businesses or contracts. The governments compete to provide better infrastructures, facilities, procedure/policy and more educated employees who know their responsibilities, obligations and rights about their jobs. While Indonesia, through its Manpower and Transmigration Minister, Erman Suparno, supported its employer who allegedly breached the contract to demand unrealistic compensation.
What would you do if you were Nike? I would start looking for other country which provides me better business contract and could keep their promise because I need a peace of mind in doing business.
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*Beni Bevly holds BA in Political Science, MBA in Marketing, and is a DBA (Doctor of Business Administration) candidate. He is the founder of Overseas Think Tank for Indonesia.
