Partnership as Union Strategy Does it Work in Asia?

Case Studies in Indonesia and Malaysia

Aryana Satrya (PhD Student) School of Political Science & International Studies University of Queensland Brisbane 4072, Queensland, Australia Phone : +61 7 3346 9343 Fax : +61 7 3365 1388 E-mail : aryana@uq.edu.au or aryanasatrya@yahoo.com.au Balakrishnan Parasuraman Industrial Relations Programme School of Social Sciences, Universiti Malaysia Sabah P.O Box 22144, 88781 Luyang Kota Kinabalu, Sabah, Malaysia Phone : +60 1 3307 9441 E-mail : drrusia@gmail or issac05@hotmail.com

Notes : - Paper is presented at the IIRA Asian Regional Congress, New Delhi, India 19-21April 2007 (http://www.iira-india.org/), The Changing Global Labour Market, Challenges and Opportunities for Asia

Partnership as Union Strategy Does it Work in Asia?

Case Studies in Indonesia and Malaysia
Aryana Satrya Balakrishnan Parasuraman

Abstract Partnership between union and management has been promoted in developed countries as the alternative strategy for restoring union influence and for mutual gains (for example see Haynes, 2001; Heery, 2002; Oxenbridge & Brown, 2002). However, there is limited research on partnership in developing countries (Wong, 2000; Wood & Mahabir, 2001; Satrya & Parasuraman, 2006). Some general results show that partnership is more effective if accompanied by strong workplace activism. The paper evaluates the partnership engagements currently emerging at the workplace level in Malaysia and Indonesia. The research identified the characteristics of partnership at both public and private companies in various industries by applying the approach provided by Oxenbridge & Brown (2002). Research finding indicates that there is similarity with the results from developed countries. The stronger organising solidarity from their members may improve their partnership in the interest of union survival. Key words: partnership, Asian, employee participation,industrial relations Introduction The study of partnership has held a prominent place in debates concerning industrial relation in Western countries. Partnership has been proposed as an alternative strategy for reviving unions (Haynes and Allen 2001; Heery 2002). In the UK, partnership has been embraced since the 1990s (Lucio and Stuart 2002: 306) and further gaining a pertinent support from the Government in the form of the Employment Relations Act 1999, which encourage business to adopt the concept of partnership at the workplace, and the establishment of partnership fund (Gollan and Patmore 2002: 19) . The Trade Union Congress (TUC) as the peak union body has further established the Partnership Institute to promote partnership of union and employer at workplaces. Heery (2002) noted that there were more than 50 partnership agreements already registered in the UK. A broader concept of partnership involves relationship beyond the firm is adopted in many European countries. The social partnership model contains social rights and responsibilities of each player in the industrial relations (IR) system, including the employers, employees, unions, and goverments. For instance, the Netherlands, have enacted legislation to support partnership through work councils (Goodijk and Veersma 2001; Parasuraman 2003). Employee representation is a large issue in Europe where National Works Council Legislation has a big influence on business (Blyton and Turnbull 2004; Markey and Monat 1997).
* Aryana Satrya is a PhD candidate in Industrial Relations at School of Political Science & International Studies, the University of Queensland, Brisbane, Australia. He was a researcher in a leading union federation in Indonesia. Balakrishnan Parasuraman is a lecturer at Industrial Relations Program, School of Social Sciences, Universiti Malaysia Sabah, Kota Kinabalu, Malaysia. Currently he is completing PhD in Industrial Relations at the University of Wollongong, Australia.

Furthermore, the European Union introduced the European Working Councils (EWC) for multinational companies and the institution for information and consultation (CDIC) in small and medium companies (Gollan and Patmore 2002: 29-30). Both mechanisms provided opportunities for greater employee participation in corporate governance. Across the diverse contexts of Europe, the United States of America, and the United Kingdom, different forms of partnership have been practiced. In most English speaking countries, partnership has been in the form of joint consultative committees (JCC), collective bargaining (CB) machinery, employee-director schemes, and occupational health and safety. In Western Europe and in most Scandinavian countries, works councils and co-determination have been important mechanisms for indirect participation. While the developed world is working to achieve a balance for effective employee participation, the utilisation of partnership schemes in developing countries, such as Indonesia and Malaysia, is far behind. The comparative research would be our pioneer works on the practices of partnership at the firm level in Indonesia and Malaysia. In relation to this, two basic questions arise: (a) how do companies manage its partnership, and (b) to what extent is the sustainability of partnership relations examined by the analysis method suggested by Oxenbridge and Brown (2002)? There is a brief overview of partnership from relevant literature. This is followed by empirical work. Finally, the results are discussed. Partnership: An Overview of the Literature Based on the description provided by the Involvement and Participation Association (IPA), Gollan and Patmore (2002: 18) suggest partnership as a loose term for the relations between employees and employers, or between trade unions and management teams at the workplace level. Haynes (2001: 167) conclude the themes contained in various partnership definitions: mutual legitimation, commitment to cooperative process, joint decision-making, and consultation. The relationship emphasises on business success and employment security. Partnership may be regarded as part of what Markey (2001) defined as employee participation in workplace, namely financial participation, direct participation, and indirect participation. Employee share ownership or profit sharing is regarded as financial participation. Management initiatives labelled as Employee Involvement/ Participation (EI/ EP) programs such as Total Quality Management (TQM), quality circles, and work groups encourage direct participation or from the employees. The establishment of unions, joint consultative committees (JCC), work councils, or the involvement of employee as members of management are the example of indirect or representative participation. Therefore, partnership may takes form as a cooperative process in the scheme of EI for boosting productivity, efficiency, and employee involvement at the shop level decision-making. This method was utilised primarily in Japan and the US (Markey 2001: 5). Partnership may also operate as an advisory, negotiation, or codetermination mechanism in the scope of indirect participation, which is primarily practised in European country as work councils, as Labour Management Cooperation (LMC), or in the form of union-management formal and informal arrangements in the UK, Australia, New Zealand, and also in the US (Bartram and Cregan 2003; Cully et al. 1999; Heery 2002; Markey 2001; Nissen 2003: 137). There were limited numbers of study concerning partnership in other parts of the world, as researchers more attracted to pay attention into exploring unions organising strategy, such as in Bangladesh (Rock 2001), Thailand (Brown 2001), and the Philippines (Hutchison 2001). Some studies investigated how JCCs and other indirect participation (IP) schemes were implemented between in-house (enterprise) unions and management in Malaysia or Indonesia (Idrus 2001; Parasuraman and Satrya 2006), the operation of work councils in South Africa (Wood and Mahabir 2001), whereas other studies uncovered various consultation schemes utilised in India and Singapore at the level of local up to national (Ratnam 1995; Wong 2000).

There are two different competing views concerning partnership through IP. Marchington (1992) explains that both managers and employees value JCC as a meaningful form of involvement or participation, as Ackers and Payne (1998) attribute union-management arrangement as an opportunity for unions to deepen their role at the employment relations. The more union is involved in the process of decision-making the more chance of employees in increasing their welfare (Boreham 2001). On the other hand, Ramsay (1990) argues that management can use JCC for undermining the power of unions in the workplace, which also revealed from the studies of Lucio and Stuart in the UK (2002), and Verma, Kochan, & Lansbury in India, Malaysia, and the Philippines (1995: 346-349). Beardwell and Holden (2001: 573) see JCC merely as rubber stamping bodies for management initiatives which focus on issues like tea, toilets and trivia. Hyman and Mason (1995) further clarify the position of JCC, it either can be management-dominated forums or can act as mechanisms for employee to influence aspects of organisational decision-making. Therefore, partnership can play different roles in organisations effecting different outcomes (Marchington 1994). The success of partnership is contingent to certain conditions. TUC and IPA (cited in Lucio and Stuart 2002: 308) propose several partnership principles to be implemented: commitment to business success and employment security, recognising legitimate interests, focus on the quality of working life (including flexible job design and training), transparency, and added value. Therefore, management have to adopt a pluralist view that involves unions in decision making (Kochan and Osterman 1994: 46), all parties seek mutual gain approach (Lucio and Stuart 2002: 308), unions move away from adversarial approach and improve their bargaining powers through gaining support from member participation and solidarity (Heery 2002; Oxenbridge and Brown 2002). However, the absence of state support and fierce business competition may inhibit partnership (Turnbull, Blyton and Harvey 2004: 304). Oxenbridge and Brown (2002: 264) suggest a framework for examining the current and future prospect of partnership. The first step is exploring the partnership background: motives of entering relationship and actors involved. Second, the views of unions and management on benefits and drawbacks are assessed. Third, it explores the content of arrangements: union recognition, participation structure, and relations between union officials and management. They argue that there are two faces of partnership: nurturing of CB when unions have a strong bargaining power in informal partnership as they were supported with membership solidarity, and containment of CB as unions involve in written arrangements with strong management influences. Marchington (1992: 136-142; 1994: 672-682) reveals similar results while explaining the role of partnership in preserving the CB. Partnership through JCC is an alternative or competing mechanism when employers develop it to oppose CB. JCC is marginal to CB if it has minimum impact due to its lack of authority in making decisions and the triviality of subject matters. However, JCC may act as an adjunct to CB, where they may have different roles but achieving mutual cooperation. Methods and Measures The methodology used was based on inductive qualitative case study approach using a multimethod technique (Cassell and Symon 2004; Kelly 1999; Yin 2003). The management and union officials were interviewed and observed, various meetings were attended, and copious notes and transcripts were compiled. Various documents were obtained from the unions and management, the analysis of which was added to the overall cache of empirical material. Most of the data was collected within period 2003 to 2005. In 2006 we made additional interviews with senior officers of the companies and related agencies. The study took places in both public and private sector companies drawn from a varied cross-section of ownership forms and business sectors. They were emerged from two bigger

projects that involved quantitative and qualitative data. The six cases were selected based on our close relationship with the companies. However, they offered an interesting mix of sectors and type of ownership. Table 1 contains information on the enterprise-specific factors, market environment, and characteristic of employment relations for each of these companies. The case study firms are (all names are pseudonym to retain confidentiality): two large postal companies (Posindo in Indonesia and Posco in Malaysia); two large and medium publishing company in Indonesia (Publishindo and Graphindo); a medium size telecommunications company (Commindo in Indonesia); a large manufacturing company (Steelco in Malaysia). All companies were unionised at a different level of membership. At the time of study, all companies had covered by enterprise bargaining and some of them had formal consultation forums in the form of JCC or similar types. All unions in Indonesia were enterprise-based unions, and founded after the end of Soeharto regime in 1998. In Malaysia, the unions of Posco have been established since it was privatised in 1992, while the union at Steelco is formed in the 1980s as a local branch of the Metal Industry Employee Union (MIEU). While some case studies may not be generalised to represent the extent and the process of JCC in Malaysian and Indonesian firms, Gummesson (1991-79) argues that rigorous investigation with limited number of cases that identifies specific issues and systems, and other important characteristics may be reasonably used to generalise similar cases or situations. This is however a study of firms which were heavily unionised, practicing JCC, covered by CB, and competed in domestic oriented market. Therefore, generalisation would be limited to firms of similar characteristics. The paper examines the implementation of partnership through indirect participation of JCC-like or in less formalised arrangements. The examination is based on the framework provided by Oxenbridge and Brown: analyse the background, benefits and drawbacks, content of arrangements, and the prospect in longer term. Contents of partnership are discussed by referring to the partnership principles of IPA and TUC, whereas the models of Marchington on JCC and CB are employed to assess the sustainability of partnership. Background The Indonesian IR has changed dramatically toward a more democratic climate since the fall of the regime Soeharto in 1998. Workplace unions mushroomed from 6,211 in October 1999 to 18,352 unions (87 federations, 3 confederations) in January 2005. Yet, union membership in Indonesia has remained at low figure. The 2005 verification conducted by the Ministry of Manpower (Depnakertrans 2005a) gave a figure of 6.2 percent (3.3 million workers) of 53.1 million non-agricultural workers, in comparison to other ASEAN countries: Singapore 14 percent and the Philippines 12 percent (Amante 2003: 13). In 2005, the Malaysian union density was about 8.9 percent (801,604 workers) of 9 million non-agricultural workers, which consisted of 617 unions (estimation based on data from DoSM 2005; MoHR 2005). There are several labour laws related to employment relations. The Trade Unions Act No.21/2000 stipulates the requirements for union formation and recognition, membership, rights and obligations, and protection. Union members and officials may come from any level of occupation, including managerial echelon. During Soehartos period, all employees at the state-owned company belonged to the Corps of Civil Servants of the Republic of Indonesia (KORPRI), a non-union national organisation. The Manpower Act No.13/2003 is the main legislation that regulates every aspect of employment, including equality principles, training, employment and industrial relations, wages and welfare, termination, and inspection.

Table 1: Case study characteristics Publishindo Concentrated, state owned, one office and one plant Dispersed, privately owned, multi-site Data communication and internet provider. Intense competitions on price and quality in corporate market Density: 53% of 620, weak members participation JCC and irregular dialogue, CB (since 2002) Density: 95% of 15,600, effective representation of membership JCC and regular dialogue, CA & CB Postal, courier, logistics, finance. Intense competitions from multinational and domestic players Concentrated, state owned, multi-site Book printing and publisher. Intense price and quality competitions, lost traditional markets including state school Density: 86% of 450, effective representation of membership Occasional meeting, CB (since 1999) Occasional meeting, CB (since 1999) Density: 21% of 1,200, limited members representation Book printing and publisher. Market leader in primary school book, intense competition, wide distribution channels Concentrated, private company, three offices, one plant Graphindo Commindo Posco Steelco Dispersed, privately owned, three plants

Sector

Posindo

Ownership and structure

Concentrated, state owned, multi-site

Product markets Postal, courier, (product type, logistics, finance. competition) Intense competitions from multinational and domestic players

Steel manufacturer. Intense competitions from multinational and domestic players, wide distribution channels Density: 95% of 350, limited representation of membership JCC and regular dialogue, CB & CA

Union strength

Density: 96% of 23,000, effective representation of membership

Nature of partnership

JCC and regular dialogue, CB (since 2001), union has voice right in corporate budget meeting

This Act replaces a number of separate legislations concerning employment. The enactment of the Industrial Relations Disputes Settlement Act No.2/2004 in the early 2006 indicated the transfer of responsibility in labour disputes settlement from the government tripartite body toward the other parties, including the conciliator, arbiter, and IR court (Serrano 2005: 5). In Malaysia, the Industrial Relations Act 1967 regulates workmen, employers, and trade unions, including Collective Bargaining (CB) and Collective Agreement (CA) (Amante 2003: 12). The Trade Union Act 1959 restricts the membership of unions within geographic area (Aminuddin 2003: 114). There are also other limitation, that is only enterprise unions are permitted to operate in pioneer industries, such as in electronic industry (Serrano 2005: 6). Moreover, each region of Malaysia also has its own labour legislations. For example the Employment Act 1955 for non-unionised workers is applied to West Malaysia, the Labour Act 1949 for Sabah, and the Ordinance of Labour Act 1952 for Sarawak (Satrya and Parasuraman 2006: 99). Antecedents and Motives Partnership has been practiced in all firms studied, although they varied in their intensity and types. Posindo, Commindo, Posco, and Steelco had a formal partnership arrangement. At Posindo, the partnership article was incorporated in the CB, whereas a JCC was established at Commindo. Similarly, the JCCs at Posco and Steelco were included in their CAs. The CA Article 21 of Posco states that A JCC will be established and represented by Posco management and workers representatives from seven high ranked union committee members. Publishindo and Graphindo adopted the unwritten forms of partnership. In Indonesia, partnerships have often been started after the unions and the managements passed volatile and adversarial relationships and entering the more stable and mature conditions (Oxenbridge and Brown 2002: 265). It was not surprising, since three of four unions were formed as the responses of workers dissatisfaction toward the management, for instance regarding wages and corruption. In those difficult times, employers were reluctant in recognising the unions. There were two cases in which employers covertly sponsored the formation of competing yellow-unions. However, in Malaysia, JCCs were a management initiative as part of a wider program such as the Human Resource Management (HRM) and Total Quality Management (TQM), employed after the process of taking over of the company. All companies in Indonesia faced intense competitions within their industry. To illustrate, Posindo has lost its traditional markets to domestic and international players in logistic markets, although it still enjoyed the legislation privilege in small size postal market. Publishindo experienced the same problem, since the procurement process of textbook for the state schools has been liberated and its technology was outdated. It had to compete directly with strong private publishers, including Graphindo, which relied on their technology, content, and distribution strategy. In Malaysia, both Steelco and Posco were involved in restructuring and organisation change. In Steelco, a quality management program for increasing productivity and company performance was implemented in 2003, whereas Posco since 2001 enhanced the standard of service through activities such as increasing productivity, implementing e-commerce, and achieving greater industrial harmony. Some indications reflected the relationship between the impact of change process in the company business and partnership. A manager (interview, Corporate Manager of Posindo, 5 May 2005) expressed the view of management toward partnership, Management has become conscious of the needs for communicating with union, as we realised that union is not a separate entity of the management. This was also sustained by a unionist, who described how union channelled its concerns of company business, The union programs supported the company efficiency process at various sectors, the efficiency toward the utilisation of assets, the efficiency related to the reduction of fraudulent behaviours (interview, Regional Union

Committee of Posindo, 4 May 2005). Top management at Steelco encouraged workers to participate actively in any EP programs in order to maintain higher labour productivity and company performance (interview, Production Manager of Steelco, 13 November 2003; interview, TQM Manager of Steelco, 2 December 2003). In Posco, the HR manager emphasised the importance of cooperation and harmony, The primary principle is that the company believes in JCC, the workers are not aliens who must be coerced; they are human beings and partners in the company (interview, IR Manager of Posco, 24 December 2003). One main factor in Indonesia that created a major impact in facilitating the emergence of partnership was the introduction of new labour law. The Manpower Act 2003 as the prime labour legislation in Indonesia clearly indicates the intention of the Indonesian government in encouraging industrial harmony through consensual deliberation and partnership. The company that employ at least 50 workers are required to establish the Lembaga Kerja Sama (LKS) Bipartit (bipartite consultation institution - similar to JCC), and registering them to the related government agency. The establishment of formal JCC at Commindo in the mid of 2005, and the inclusion of the JCC clause in the Posindos CB for the period of 2004-2006 were obvious indications of the impact of the law. Partnership has also been promoted by the Malaysian Government through the issuance of the Code of Conduct for Industrial Harmony 1975. The Code 1975 encourages the promotion of cooperation at al level in industry, emphasises the importance of communication and consultation between employers and unions in the workplace. Employers are encouraged to establish employee participation through the use of JCC. The content of Partnership Arrangements This section discusses relationship between CB and partnership scheme based on the model of Marchington, whether both are complementing, competing, or merely a trivial relationship. The principles of IPA, TUC, and the legislations guide the assessment of the partnership in the CB and partnership scheme. The CB is valid for two years in Indonesia for all workers, while the CA in Malaysia applies only for unionised workers during three years period. The objectives. IPA and TUC suggest the adoption of principles that consider the interests of each party, improvement of quality of working life, and transparency. The Manpower Act 2003 stipulates that CB shall at least contain the rights and obligations of each party, the period of CB, and shall not provide inferior conditions compared to the laws. The Act even requires the employers for creating partnership, developing business, diversifying employment and providing welfare to workers/ labourers in a transparent and democratic way and in a way that upholds justice. The bipartite cooperation institution conveys a function of consultation. It has to be registered at a government agency of labour. However, it is not a forum for settling IR dispute, nor a competing institution of union, and directs its activity toward improving productivity and welfare. The aim of the Code 1975 is to lay down principles and guidelines to employers and workers on the practice of industrial relations, for achieving greater industrial harmony (Parasuraman 2004: 434). The Code has four main areas: responsibilities, employment policy, collective bargaining, communication and consultation. The last part of the Code 1975 proposes that employers should provide any means of consultation method to allow employees to give their views on matters that affect their working life and also work situation, and encouraged to discuss the wider range of workplace issues, which concern both employees and management. The Posco Manager stated his sympathy over JCC, They have their own specific interests and points of view which may clash with those of the management, but the objective of JCC is to obtain greater harmony, remove grievances and create better understanding (interview, IR Manager of Posco, 24/12/2003).

However, we found there were two groups in regard of bargaining scope. The first was Posindo and Posco, where union and management negotiate over all matters in their CBs or CAs, including the schedule of pay increase. The latest version of Posindos CB even allows the union for attending and submitting its proposal at the company budget meeting (CB Posindo 2004: 4). The second group consist of the rests, in which the CB dealt limited rights to unions. All unions had consultative but no clear negotiation rights on pay and benefits. A typical clause of CB may illustrate this matter In consideration of the capability of Commindo, Commindo strives to provide wage increase every year considering the level of inflation of the previous year. (CB Commindo 2002: 51). In the case in Steelco, the issues of the CB often limited to wages and working conditions. They cannot discuss issues such as dismissal, transfer, appointment and allocations of duties that relate to the managerial prerogatives already incorporated in the IR Act 1967. The JCCs in some cases have gained the role for supervising and complementing the implementation of the CBs. For example, the parties in Posindo agreed that certain unclear issues in CB, such as regional health benefit, were to be discussed at the bipartite institutions. The results were incorporated as a binding part of the CB (CB Posindo 2004: 85). Management and union in Steelco in 2003 agreed for increasing the night shift allowance after the union argued that the shift allowance rate at Steelco was very low compared to other manufacturing industries in Malaysia (interview, Senior Officer of MIEU, 06/11/2003). Subject matter. There was a contrast mixture of subject matters arising through JCC meetings. The management and union at Steelco discussed trivial operational issues such as car parking, toilets, locker room, heater, canteen, water cooler, and transport (interview, Unionist of Steelco, 10 October 2003). These evidences were supported by the comment of a unionist from the Malaysian Trade Union Congress (MTUC), Even they have JCCs but they only talk about safety, toilets, poor lighting, the canteen price is going up, but not about working hours, health and safety, wages, promotions. All these matters are not in the JCC meetings (interview, Senior Officer of MTUC, 15/12/2006). The other partnerships included common topics such as pay and benefit, labour policies, educational and training, safety, and productivity, as well as occasional issue such as joint committee for commemorating the companys anniversary (interview, Union Chairman of Graphindo, 06/05/2005; interview, Union Leader of Publishindo, 13/05/2005; JCC Minutes of Meeting of Commindo 14/10/2005). In Posindo and Posco, the regional level of JCCs focused on operational issues like general employment, conditions of work, service and productivity, safety, training, and staff rules, whereas the national JCCs discussed strategic issues like manpower matters, mergers and acquisitions, and product strategies (Parasuraman and Satrya 2006: 115, 117). Management of Posindo has invited the union to participate in discussing strategic issues, such as inviting the investors for new businesses (interview, Union Leader of Posindo, 27/05/06). Regarding the quality of discussion, a management representative commented, At present, the condition has changed significantly. They delivered good arguments and offered solutions, not merely expressing their disapproval. They have good reasons and evidences (interview, HR Regional Manager of Posindo, 09/06/2005). JCC in Posindo even entered the topics that usually considered as management prerogative, such as concerning good corporate governance and the replacement of the Board of Director. The union considered that the management did not manage their business in a transparent and democratic way, which created an impact toward the welfare of the workers (SPPI 2003, interview, Union Leader of Posindo, 18/04/2005).

Process. The Ministry of Manpower decree No. 255/ 2003 stipulates that the LKS Bipartit consists of 6 to 20 permanent members that comprises equal number of delegates from management and workers, works for two years, meet at least once a month, and reports its activities once a semester to the government agency of manpower. Nevertheless, there is no detail guideline in the Code 1975 for implementing the partnership in Malaysia. In Posindo and Posco, the meetings are conducted at national, regional, and local level. The frequency of meeting is not specified, as at the national level usually conducted once a month, and less frequently at the regional or local level. The management at the national level committee is chaired by top level of management, such as the Director of Human Resources at Posindo, and the Chief Executive Officer (CEO) at Posco because many of meeting issues require their approval (interview, Union Leader of Posindo, 27/05/06; Minutes of Meetings of Posco between 2001 to 2003). They are assisted by senior managers, as the union is represented by its National Leaders. The committees in lower levels adopt similar structure, as the team of management are chaired by the Regional Managers. The JCC meeting in Posco is rotated within Kota Kinabalu, Kuching, and Kuala Lumpur, enabling the team members gathers a better understanding of the cultural differences between East and West Malaysia. JCC at Commindo comprises six members from the management (General Manager of Administration, HR Manager, and staffs) and three members each from the union and nonunion employee (the union had covered only 53% of employees). At Steelco, the team is chaired by the Production Manager, comprises the HR Manager, three Production Executives, three Production Supervisors, and six Union Committee members (interview, HR Manager of Steelco, 07/10/2003; interview, union representative of Steelco, 11/10/2003). Since its establishment, union in Posindo has conducted regular meeting with the management. The relation was institutionalised in 2004 as the Forum Komunikasi Hubungan Industrial/ Forkom HI (Communication Forum of IR-similar to JCC). However, both parties agreed not to convert the Forkom HI into LKS Bipartit, since their functions are similar. Union was actually reluctant to implement the LKS Bipartit given that it would provide the opportunity to non-union members (which meant also including the yellow union at Posindo) in becoming workers representatives, as the Manpower Act 2003 requires that representatives are elected by workers in democratic way. Besides, the management was not ready for implementing the new scheme (interview, Union Chairman of Graphindo, 18/4/2005). The partnerships in other companies were less intense. In the middle of 2005 Commindo established a formal JCC that lasted only about three meetings during eight months due to lacked commitment from the non-union representatives. However, the JCC has never been officially abandoned. The union still had occasional meetings with the management. In Publishindo and Graphindo, there were sporadic meeting without certain structures since they have not adopted official form of partnership, as the committee at Steelco meets monthly. Powers. The consultation forum is used for making a joint decision. The agenda is set up by both parties, which may be set up in advance. However, there are certain issues which are discussed and both parties cannot reach an agreement. The issues are escalated to higher level of consultation forum. Since union at Posindo and Posco have a strong support from their members, they possess a strong bargaining power in the discussion. However, union at Posindo has a greater bargaining power compared to its colleagues at Posco (Satrya and Parasuraman 2006: 101). They had skilled committee in negotiation, in which some of them had earned their masters degrees. Besides that, it has exercised their industrial power to emphasise their willingness to the benefit of workers, such as organising a solidarity campaign (interview, Union Chairman of Posindo, 18/4/2005).

Levels of participation and militancy in other unions were not that high. There were limited members showed up in attending union meeting. Unions also found difficulties in recruiting volunteers for conducting union activities. Even not all union committee members showed their commitment. The meetings in those unions were more likely as a consultation or even a one-way information style, rather than negotiation forums. The final decision on the operational issues was made by the management without any union committee members participation, as indicated by the following comments by the union representatives:
Between management and union sometimes do not have mutual understanding. For example the management does not want to accept our idea. What we can do, they do not want listen to us. What they said A, then A; B, then B. We need to follow their instruction all the time. This is problem in this company. We, in the management-union meeting, sometimes reject management idea but they do not want to accept it (interview, Union Representative of Steelco, 10/10/2003).

The above statement clearly signified that the ultimate decision is taken exclusively by management. In other words, the management will make the final decision prior to the meeting, and during the meeting they try to persuade the union committee members to accept their decisions. A Senior Officer of the Malaysian Employers Federation (MEF) supported this occurrence, The employees or unions in the workplace can influence decisions, but the final decision is in the hand of employers (interview, 24/09/2003). Pateman (1970:70) considers this situation as pseudo participation, namely a technique used to persuade employees or the union to accept decisions that have already been taken by management, resulting a suppressed IR confrontation. Lack of knowledge in negotiation and bargaining skills in union representatives were indicated as one source that caused this matter. Benefits to the Parties There was a general view that union acted as a channel representing its members in communication, consultation, and grievance handling led to greater effectiveness and less management effort. Therefore, a partnership with union is strategic, which can be improved by keeping the communication between union and management. A Posindo manager that chaired a national engineering team (interview, 05/05/2005) said, I agree on what [Michael] Porter has argued concerning communication. It means that union and management have to meet regularly for discussing strategic matters. Therefore, when management make a strategic decision, it is better for communicating it with the union, workers, and other constituency. The role of unions as a mediator between its members and management was obvious. For example when the unions managing grievance handling, they were not blindly supported members, but also persuaded them to follow the regulations. Those efforts may be regarded as the implementation of the clauses in the CB, which generally stipulates that union has the obligation of developing its members to become honest, discipline, and productive. The other example is when the management of Steelco was faced with the problem that its workers using medical leave as an entitlement in addition to their annual leave. After various discussions between workers, union representatives and the management, the workers tended to understand better the concepts of medical and annual leave as stipulated in the CA. As an expression of partnership, unions have provided suggestions related to the company business. Union in Publishindo initiated a marketing seminar in 2004 as a response of the decline of the companys business. It invited marketing experts with extensive experiences in order to induce fresh idea for the revival of company (interview, Union Committee of Publishindo, 17/5/05). A more intensive involvement was made at Posindo. Unions have conducted an investigation to uncover the frauds in postal shipment. Some proposals concerning company business, such as the critique of postal franchise scheme, have been submitted to the management (interview, Regional Union Committee of Posindo, 4/5/2005).

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All unions supported partnership relationships. They described that the main benefit of partnership was the employers provided more opportunity for communicating their policy. They were also less reluctant and more open in dealing with workers grievance. In Posindo, the union can even participate in the budget and programs meeting as a trade off for recognising the managements right to manage the company. Employers Strategies The labour laws in Indonesia provide a number of protections in securing the freedom of association and the right to organise. The legislations include the protection of the right to pursue the welfare of workers and family, negotiate a CB, represent workers in labour dispute and industrial relation institutions, collect fund, and conduct or join the strike. There is a prohibition from preventing union activities, for instance by dismissing, demoting, transferring, cutting wages, or intimidating the union officers and members. Employers are prevented to conduct lock out for dealing with normative demands that have been regulated by laws. Even employers are encouraged to prevent dismissal. The Code 1975 in Malaysia also recommends that both employers and workers resolve all differences and disputes in accordance with collective agreement or by negotiation, conciliation, and arbitration if there are no agreements. Both parties refrain from resorting to coercion, intimidation, victimisation, as well as to avoid go-slow, sit down and stay-in-strikes. In practice, employers did not always adhere to the legislations. They have secretly implemented strategies to control the influence, power, and activity of unions. In general, most employers have practiced at least one of these following strategies: Employing non-definitive, unclear, clauses in the formal agreements. Dealing directly with the worker and bypassing the union officials. Supporting the formation of competing union, this was known as yellow-union, or establishing an alternative form of non-union partnership. Anti-union activities, including illegal behaviour over union officials. The example of management control over relationship in Indonesia was the practice of using the non-definite statements in formal agreements. It is common to find such statement in the CB The Company may consider suggestions and idea from union in order to develop the IR, professionalism, and performance of the company (CB Commindo 1999: 6) or The Company, based on its capability, may provide assistance in supplying space for the use of union office (CB Graphindo 2004: 8). The terms of may and based on its capability known as rubber clause due to its nature of offering flexible, ambiguous conditions - were deliberately used for limiting the commitment of management. Therefore, management support is determined on a case-by-case basis. Since union usually have few resources, lack of management support reduces the ability of union to conduct its activity. The procedure of grievance handling in a company involves some successive stages. The legislations, however, does not regulate when union may commence advocating the worker. Management preferred to deal directly with the worker and involving unions at the latest stage as possible. They were also in favour working with the enterprise union officials rather than external unionist - such as from the union federation - since they knew they might have more control over the in-house union officials. Therefore, managers aimed to develop the preferred discipline procedures articles in the CB. At the beginning of union establishment, every unions in Indonesia experienced negative response from employers. In some cases, there were incumbent unions that have already existed since the period of Soeharto. The workers were automatically become as union members since union dues were directly deducted from their salaries. In these situations, employers reluctantly accepted the establishment new unions, argued that there were already the existing yellow-unions. In other cases, employers covertly encouraged a number of 11

workers to set up other contending unions. These kinds of yellow-unions actively recruited members, spread out negative rumours concerning genuine new unions, and even intimidating members of the new union to switch their membership. The yellow-unions were likely more compliant to employers, since their officials usually come from managerial level. Those unions have rarely had any union activities. They always delivered supports toward management policy. There was no similar experience found in Malaysian cases. However, employers often use different strategy in prohibiting the formation of unions, as explained by a Senior Officer of MTUC. If the workers try to establish union that is time they will set up this JCC so-called Joint Consultation Committees. The moment that ideas have forgotten, then the JCCs will become abandoned. Not otherwise, not as culture we must have consultation we must do it. They will only do as way to keep unions out. The moment the talk is finish, then the JCC also finish. No discussion (interview, 15/12/2006). Although illegal behaviour is strictly prohibited by laws, management employed various tactics covered under the term of management prerogative rights. The article may be described in the CB as follows The Company preserves the rights to manage its business and freed from the union interference. There were incidents in which management transferred difficult union officials to other department or office. The company would argue that their skills were needed in the designated area, whereas the union perceived it as the management threat for curbing union activity. In other cases, the company prevented the promotion of union officials, or reluctantly granted permission for union officials to conduct activities during working hours. MTUC (2004) submitted a report concerning infringement of trade union rights to the ILO Committee on Freedom of Association. The topics involved termination of deduction facility for union dues since 2002 in banking industry, transfer and dismissal of union officials in shipping and garment industries, refusal to recognise independent unions, establishment of employer-dominated unions, and arbitrary denial of collective bargaining rights. How did the unions respond to the strategy of management? Facing the challenge of yellow-unions and illegal anti-union behaviour, the genuine-unions opted to convince the workers by demonstrating their efforts and capabilities for pursuing workers welfare. Unions in Posindo and Publishindo mixed the use of adversarial (including demonstration or strike) and partnership approach toward management, whereas other unions showed a more careful partnership strategy, particularly if they operated at private companies. They were likely to employ non-adversarial actions and developed a personal contact with the HR department. Nevertheless, these actions might create tensions between the employees and the unions. A lack of feedback from the union representatives, for example at Steelco, was a criticism expressed by the employees. They viewed that the union neglected to inform the workers about the issues that were discussed in the meeting and the action taken. Furthermore, they believed that the union has not played active role in fighting for workers welfare and better working conditions (interview, non-managerial employee of Steelco, 10/10/2003). In Posindo and Posco, unions have successfully negotiated the provision of clear, detailed articles in the CB. It specified the commitment from management such as the supply of office space and its equipments, regular funds assistance, and the use of the companys facilities. The decision on employment status of the union officials, such as rotation and transfer, and the procedure of grievance handling were taken by involving the union. Unfortunately, this was not always the case for the remaining unions. They still had to accept the domination of management due to lack of bargaining power.

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Discussion The pattern of nurturing cases was found in the public sector companies where they faced intense business threats. Unions had a stronger bargaining power since supported with high level of unionisation and membership solidarity. Unions at Posindo and Publishindo used occasional adversarial approach while involved in labour disputes. The role of partnership in these cases was a complementary to the CB, where they may have different subjects but achieving mutual cooperation. On one side, partnership scheme is focused toward joint decision making on selected operational and strategic issues. On the other hand, CB or CA is concerned about pay structures and conditions of work in accordance with the labour laws. Further analysis of the partnership confirms that the operations of the partnership and CB may appear to be in tandem, there are complementarities to their function. The adjunct model (Marchington 1992, 1994) emphasises that partnership and CB have different roles, but they each provide tangible benefits for workers and management. A senior officer of the Ministry of Manpower (interview, 23/3/2006) provides support for this model by explaining that formal partnership highlights topics for improving productivity and welfare, and not intended for discussing the subjects that has already contained in the CB or settling IR disputes. The containment cases came mainly from the private companies. They could not afford to use a strong stance toward management due to their lack of support from members. Since some of them had a medium level of unionisation and rarely conducted internal meeting, they found hard to retain member loyalty. Therefore, they were vulnerable from the challenge of employers. Unions did not use adversarial approach and seeking opportunity in improving their credentials through the use of adjunct partnership, which combine a more formal partnership with CB and CA. Since management possessed a stronger bargaining power, they employed a number of strategies for limiting union influence in employment issues. Hence, the study produced a mixed results compared with the previous study in the UK (Oxenbridge and Brown 2002). There is a similar characteristic of the partnership continuum between Indonesia and the UK, namely the strong unionism at one end and the contained union activity at the other end. However, the strong unionism, both in Indonesia and Malaysia, may not be attributed toward company characteristics such as company size, industry sector, as well as the level of partnership formalisation. If in the UK, the nurturing cases were the small to medium production firms with informal partnership, in Indonesia and Malaysia the unions from public sector in service industry tended to possess a stronger bargaining power, irrespective they were covered with formal partnership agreement. Strong workplace participations enable them to restrict the effort of employers in reducing union capacity through imposing formal written partnership. On the other hand, Steelco as the only medium size manufacturing company illustrated that although union had high union membership, it could not take much benefit in partnership. The differences may be explained from several numbers of views. Firstly, the Indonesian employers were more convenience to use informal partnership in restricting union influence since they did not have to express their clear commitment toward partnership. Therefore, if they were to enter a more formal arrangement, differs from the UK cases, they would use non-definite, ambiguous descriptions. A clear statement for limiting union capacity may be used for accusing that the employers implemented the illegal anti-union activity. Secondly, the legislations in both Indonesia and Malaysia regulate, or at least promote, how the partnership is conducted. The role of government is imperative in encouraging the partnership through legal requirements (Frenkel 1993: 314; Turnbull, Blyton and Harvey 2004: 304). It provides the opportunity of unions to be involved in the issues that is previously regarded as the domain of management. On contrary, a more liberal condition in the UK provides more space for the employers to decide how the partnership be implemented (Oxenbridge and Brown 2002: 274).

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It is not surprising, as partnership scheme looks being adopted smoothly in Indonesia. Recent data showed that there were 7,866 LKS Bipartit that have already registered at the end of 2005 (Depnakertrans 2005b), a significant achievement considering that the concept campaign has just been introduced by the Manpower Act 2003. This is partly may be addressed as union-management cooperation is not considered as a new concept in the Indonesian IR. The use of partnership principle can be traced back since the introduction of the concept of Hubungan Industrial Pancasila (HIP - Pancasila industrial relations). The HIP was adopted by the Soeharto regime for the IR system that referred to the Indonesian philosophical foundation of Five Principles. The system, which was introduced in 1968 by the chairperson of GASBIINDO (Amalgamated Indonesian Islamic Labour Unions), emphasised on harmony partnership between workers, employers, and the government. Therefore, it positioned all actors in the production process within a framework of unitarist national development, which prohibited the conduct of strikes and lock-out (Sudono 1978: 20). However, the popular HIP concept has never been stipulated in the Indonesian labour act, used merely up to the Ministerial Decrees. The introduction of this term in the Manpower Act No.25/1997 has never been realised due to the cancellation of the Act (Suwarto 2003: 95). In the reform era, the term of HIP, as well as harmony or balance, has been abandoned. Nevertheless, the Manpower Act 2003 still applied the principles by stipulating that, the industrial relations is based on the values of the Pancasila without having to use the literal term of HIP. It still also encourages the use of deliberation to reach consensus. A Senior Officer of the Indonesian Employers Association (Apindo) expressed this unitarist view as follows, All speak about partnership, but the views have to refer to the principle of common house [of both the employer and workers] (interview, 28/04/2005). However, the management in Malaysia have adopted a different view regarding the implementation of partnership. A Senior Officer of the Malaysian Employers Federation (MEF) explained the position of employers:
We are not trying to promote partnership as particular move. Of course, we have industrial relations our consultants that always promote a good relationship between parties. I would say our relationship with the union or MTUC are close. Although we disagree, normally we say that aggress or disagree so we are not critics union. As far as our consultant concern, they do negotiate on behalf of company on CA, resolve issues, trying to understand each better. We do. But there is not something like we are trying or directly promote partnership but we try to resolve issues in more amicable manner. If you see the records, a lots of industrial relations cases at the industrial court, we are very happy MEF play an important role to resolving cases even at the Industrial Court (interview, 18/12/2006).

If a unitarist approach is commonly found in Indonesia, a more pluralist view is present in Malaysia. This stance was further explained by the same officer, indicating a demand for changing of union behaviour:
Of course we are very much to say that employee and employers interest are one. Of course to make company grow and more competitive, arising from that we can share more profits. We make the pie bigger. Unfortunately this is not happening. The union always demands. Workers and employers always try to defend the position and give little as possible. They actually have mutual distrust. Which is you talk about partnership is possibility then you need to have to change the relationship adversarial which something like performance. I am sad to say that this is not really happening in Malaysia. Of course we MTUC and MEF talk each other at the national level but we and do lots things to be done (interview, 18/12/2006).

A study by Parasuraman (2005: 434) reveals that most of the private companies in Malaysia do not use the Code 1975 as a basis for implementing any type of employee participation at the workplace the employers, as the Code serves only as a recommendation and do not have any legal binding power. 14

Conclusion Our findings suggest that partnership schemes in Indonesia and Malaysia were preceded by similar events to those described in other studies: major organisation change, business alignment due to the increase of competition, or implementing quality program. Both parties took beneficial from the adjunct model of partnership program, whereas the role of CB and JCC were complementing to each other. The employers gained assistance from the unions in implementing their corporate programs, whereas the unions enjoyed additional opportunity for enhancing their power through widening the scope of negotiation into new issues other than traditional bread and butter issues (Bronfenbrenner 1997). There are several conditions that currently present in supporting the implementation of successful partnership, namely the support from government toward partnership, and less adversarial approach adopted by unions that were indicated by the decrease of number of strikes (Nugroho 2005: 19; Parasuraman 2005: 437). However, a high level of workplace activism is a necessary requirement for unions in translating the opportunity into real success of partnership (Heery 2002; Oxenbridge and Brown 2002), as also indicated by the results of this study. Tendency of employers for seeking bigger beneficiaries from partnership, less partnership-friendly business competition in the future, and a possibility of change of the policy of government are beyond the control of unions in achieving a success partnership. References Ackers, P. and J. Payne. 1998. 'British Trade Unions and Social Partnership: Rhetoric, Reality and Strategy.' International Journal of Human Resource Management 9(3): 529 - 550. Amante, M.S.V. 2003. Asean Industrial Relations: Is a Regional Framework Possible? URL: [http://www.solair.upd.edu.ph/images/Amante_paper.pdf]. Aminuddin, M. 2003. Malaysian Industrial Relations and Employment Law. 3rd Edition ed. Malaysia: McGraw- Hill. Bartram, T. and C. Cregan. 2003. 'Consultative Employment Relations in Human Resource Management Environments with a Union Presence.' Journal of Industrial Relations 45(4): 539-545. Beardwell, I. and L. Holden. 2001. Human Resource Management: A Contemporary Approach. 3rd ed. London: Pitman Publishing. Blyton, P. and P. Turnbull. 2004. The Dynamics of Employee Relations. 3rd ed. Basingstoke: Palgrave Macmillan. Boreham, P. 2001. Trade Unions, Industrial Relations and Economic Policy Institutions: The Implications for Unemployment in the Oecd Countries. Department of Human Resource Management, University of Strathclyde. URL: [http://www.hrm.strath.ac.uk/research/publications/occ-12.pdf]. Bronfenbrenner, K. 1997. 'The Role of Union Strategies in Nlrb Certification Elections.' Industrial & Labor Relations Review 50(2): 195-212. Brown, A. 2001. 'After the Kader Fire in Thailand'. In Organising Labour in Globalising Asia, eds J. Hutchison and A. Brown. London : New York :: Routledge,. Cassell, C. and G. Symon, eds. 2004. Essential Guide to Qualitative Methods in Organizational Research. London: Sage Publications. Cully, M. et al. 1999. Britain at Work. London: Routledge. Depnakertrans. 2005a. 'Daftar Federasi Serikat Pekerja.' Jakarta: Departemen Tenaga Kerja dan Transmigrasi,. URL: [http://www.nakertrans.go.id/]. Accessed January 15 2004.

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