The Global Sweatshop
By William Greider
Rolling Stone, June 30, 1994. "National Affairs" article.
[Washington] -- This is the perverse nature of the global economy: The
economic self-interest of Americans, not to mention their moral principles,
is now tangibly connected to strange places and people who are very unlike
us, whether we know it or not. While the press has concentrated on how the
Clinton administration resolved its human-rights dispute with China, a more
telling case has been largely ignored - the suppression of labor rights in
In this instance, the self-interest of American wage earners is connected
to the tens of thousands of Muslim women who make running shoes and blue
jeans, VCRs and cordless telephones for the world to buy. These young women
are newly liberated from rural peasantry by the industrial boom under way
in their country. Yet they are also exploited by the global system of
production and by their own government, which forcibly prohibits them from
exercising their most basic rights - free speech, freedom of assembly and
freedom to organize a union to speak for their interests.
Do Americans care? Probably not, and their indifference reflects a general
ignorance of how the world now works. The migration of industrial
production to developing nations like Indonesia over the last 20 years has
moved millions of low-skilled jobs offshore, jobs that are not going to be
coming back - ever. The vast army of cheap labor available elsewhere in the
world will continue to depress the wage levels of skilled workers in the
United States and other industrialized nations.
That much Americans do get, but they rarely pursue the logic of the
situation. If the bottom is not puffed up, then the top must continue to
decline. This connection is a matter of hardheaded market forces, not
bleeding-heart sentiment. The world economy, as labor activist Richard
Rothstein explains, has become a "global hiring hall."
During the last few months, Indonesian workers and government officials
have battled one another in a forlorn struggle to catch the United States'
attention and make a favorable impression on Bill Clinton and his
lieutenants. Under U.S. trade laws, Indonesia and other developing nations
get special treatment - reduced tariffs intended to stimulate growth - but
preferential status can be withdrawn if the country persistently violates
established standards for labor rights. Formal complaints were filed by
Human Rights Watch Asia and the Washington, D.C.-based International Labor
Rights Education and Research Fund, asking the U.S. government to withdraw
benefits for Indonesia under the Generalized System of Preferences (GSP).
Clinton's trade representative investigated and promised a decision, then
kept postponing the deadline.
The mere threat that Washington might someday withdraw its blessing proved
to be a therapeutic stimulant for Jakarta. The Suharto government is a
bloated oligarchy that has suppressed workers for three decades with
tactics ranging from mass arrests to kidnapping and murder; meanwhile, the
dictator's family and assorted cronies have gotten very rich doing deals
with multinationals. But this year, Suharto abruptly declared his
solidarity with the working class.
The government raised the legal minimum wage for factory workers, albeit to
a still pitiful $1.80 a day. It also announced that the army would no
longer be used to muscle workers into compliance with employers' demands.
The government even promised to investigate the army's notorious abduction,
rape and murder of a 23-year-old labor activist named Marsinah. Marsinah
was ceremoniously enshrined as an official 'labor hero.' Assorted US.
notables like Treasury Secretary Lloyd Bentsen trekked to Jakarta,
promoting new contracts for US. companies and praising the Indonesian
dictator for signs of "progress."
But Indonesian workers knew it was all a charade concocted for Washington's
benefit. For one thing, despite the official decrees, the military kept on
intervening in labor disputes, showing up at the plant gates and arresting
strike activists, herding the women back into the factories. This occurred
22 tunes within the first month following the supposed reform.
More to the point, the new minimum-wage law was widely ignored by
employers, probably by most of them. Managers of garment, shoe and
electronics factories, including many turning out goods for US. companies,
decided unilaterally that 3,800 rupiah a day was too much, and so they
didn't pay it. Like so many other laws in Indonesia, this one exists only
Given their own weak position and the forces arrayed against them, workers
at scores of factories reacted with extraordinary bravery: They organized
their own wildcat strikes and closed down production. Though the news did
not reach U.S. audiences, more than 180 strikes occurred in Indonesia
within a three-month period earlier this year.
The action was centered in the vast industrial zones around Jakarta, in
west Java, but it spread to other islands, too - an unprecedented rebellion
for this long-repressed country. In northern Sumatra, the unrest grew into
riots after a labor activist mysteriously drowned. Rampaging workers
lynched a factory owner. One by one, many reluctant employers agreed to
comply with the law, not because the government enforced it but because
these courageous women asserted their rights.
The Suharto government had some other big cards to play, however, and it
did. It awarded a $23 billion contract to General Electric, Mission Energy
and Mitsui of Japan to build a major, privately owned power plant, a deal
backed by low-interest financing from the Export-Import banks of both Japan
and the United States. The complex project consumed 22 months of hard
negotiations, but it was miraculously completed just three days before
Washington was supposed to rule on the complaints about Indonesian labor
The timing was perhaps not a coincidence. When the GSP deadline arrived on
Feb. 15, Washington ducked and postponed the Indonesian question for
another six months.
Whose side are we on? Should the Clinton administration stand up for
workers, both here and in Indonesia, as the long-term strategy for halting
the decline of U.S. wages? Or will the administration just play salesman
for U.S. multinationals eager for action in emerging markets? Clinton is
caught between those two imperatives, not just in Indonesia but across
Asia and Latin America, everywhere that impoverished nations are entering
the global hiring hall.
I fear that Clinton has already chosen. Labor activists suspect that a
slow-motion cave-in is under way. The president's business friends are
coaching him to be "realistic" about human rights. And he has already an-
nounced plans to visit Jakarta in November for another economic summit of
Asian Pacific leaders. Suharto will preside, and it would be most impolite
for Clinton to complain that his gracious host brutalizes his own citizens.
When I was in Jakarta recently, working on a book about the global economy,
I went to interview a lawyer named Muchtar Pakpahan, who has founded an
independent federation of free trade unions known as SBSI (whose name in
Bahasa roughly translates as Indonesian Prosperity Labor Union). SBSI
claims to have 250,000 members and 95 branches across the country's 27
provinces, but it is illegal because the only authorized labor federation
is the government's.
The national chairman of the government's labor federation, SPSI, nearly
always sides with business and against workers in labor disputes because he
is himself a multimillionaire businessman, a key figure in a conglomerate
that owns 10 garment factories. For that matter, the government's minister
of manpower is also a very wealthy businessman whose own workers went out
on strike because one of his garment factories wasn't paying the lawful
minimum wage. The fictitious nature of Indonesian labor law is well
understood by everyone, though the system is never challenged in print
since the Indonesian press is not free either.
To meet Pakpahan, I was led on a circuitous route through narrow alleys in
a seedier part of town devoid of high-rise office buildings and luxury
condos and construction cranes, the familiar symbols of the booming Asian
economy. It all seemed a bit melodramatic. But when we finally reached the
union's gloomy little office, Pakpahan didn't show. He'd been arrested.
The police had grabbed Pakpahan the day before as he was about to address a
meeting in Semarang, in central Java. Pakpahan was promoting a nationwide
general strike - really only a one-hour walkout - to demonstrate SBSI's
strength and send a message to Americans. Nobody really knows if Pakpahan's
federation has the membership he claims, but the military commanders who
organized his arrest did not wish to take chances. In all, 21 union leaders
were rounded up and kept in jail for three or four days. Pakpahan was
accused of 'spreading hatred" and undermining the authority of the
government. The general strike, not surprisingly, was more or less a flop.
The dozen or so young workers who were gathered around the table at
Pakpahan's headquarters were unperturbed by the Indonesian government's
heavy- handedness. Indeed, they seemed to draw encouragement from the fact
that they had made the regime so nervous. "If the government wanted to
stop this organization," said a 33-year-old organizer named Ara Tampubolan
"they did it at the worst time. The government always creates many reasons
for the future of SBSI."
Rini, a young mother who stitches raincoats in a Korean-owned garment
factory, expressed confidence that the United States would not tolerate
Suharto's flagrant violation of their rights. "I think the American
government is with labor, not the companies," she said. "The American
government should properly stand on the same side with the workers."
Tampubolan was not so sure. "There are many fluctuations in the American
government," he said. "We understand that America only acts in a country if
America has an interest in doing so - that's the reality."
Sitting around the long table, these young activists seemed so frail and
inexperienced as they talked about their infant movement. They sounded so
innocent in their optimism, naively confident that kindred spirits from
other nations would rally to their side. Perhaps these women and men do
represent the beginning of a vigorous democracy in Indonesia, the first
voices in a movement that might someday lead to a free society and a better
measure of economic justice. But the odds are certainly against that. The
power arrayed against them - the government, the military, the
multinationals is awesome. These young people are quite alone.
Levi Strauss, the San Francisco clothing company, is widely admired as a
"white hat" among multinationals - there aren't that many - because Levi
Strauss has pioneered its own corporate code of conduct to prevent the
abuses familiar to low-wage economies, from suppressed worker rights to
unsafe working conditions to environmental degradation. Levi Strauss
contracts out production of Levi's and Dockers to more than 700 sewing and
finishing operations in more than 50 countries, and the company
conscientiously inspects those working places to insure compliance. It
pulled out of Burma and is leaving China because of the brutal repression
of workers in those countries; overall, it has canceled ties with
approximately 35 contractors who faded to clean up their act.
Still, even with good intentions, a company cannot avoid the muck of harsh
social conditions and repression. In early March, women workers walked out
at the PT Sandrafine Garment factory in Tangerang, where Levi's and Dockers
are made (along with other name-brand clothes), because the manager was
abusive and refused to pay the new minimum wage. Levi Strauss intervened
and the situation was corrected.
That same month, workers from another Dockers factory protested to the
National Human Rights Commission because the managers at PT Duta Busana
Danastri were strip-searching female employees - checking to see if they
really were menstruating when they claimed their two-day menstrual leave
provided by law. The demonstrators' banner complained: DOCKERS ARE SOLD
DEARLY, WORKERS ARE PAID POORLY. Levi Strauss was sufficiently appalled
that it canceled its orders with that factory.
"When you go into developing countries, it's not a simple process," Levi's
David Samson explains. "But we believe we're effecting positive change.
It's better today than it was two years ago, and five years from now, it
will be better than it is today."
The sports-shoe industry - major brand names like Nike, Reebok, L.A. Gear -
faces similar conflicts, with varying degrees of corporate discomfort. More
than 30,000 workers in the Jakarta area - most of them young women -
assemble the pricey athletic shoes exported to the United States and
elsewhere, and the women engage in sporadic protests over working
conditions and wages. Typically, they live in factory dormitories or in
cramped four-to-a-bed bamboo hovels outside the factory gates.
For many of these Muslim women, hopeful migrants from rural poverty, the
factory jobs provide the first cash income they've ever seen. Yet these are
industrial jobs that do not provide self-sufficiency, let alone the basis
for middle-class consumption. The sunny vision of free trade in the global
economy - a rising tide that lifts all boats - cannot be fulfilled so long
as this is the case.
Reebok has its own code of conduct and has initiated an annual human-rights
award to demonstrate its corporate values. Nike, like other companies,
points out that its workers are still five times better paid than
Indonesia's rice farmers. These factory jobs, Nike argues, will eventually
spawn a higher standard of living in Indonesia, as they did in Korea and
Taiwan, though "not always immediately and not necessarily without warts."
But that process does not happen automatically - and did not occur in other
places until there were free and militant labor movements willing to speak
for workers and demand larger shares of the newly created wealth and, if
necessary, foment conflict. Though repression has moderated somewhat in
recent years, Indonesia remains a prototypical fascist state, a dictatorial
regime in which political power and economic power are fused with military
power to control the lives of everyone.
This arrangement has been quite successful to date in generating growth and
new wealth - for some Indonesians and some foreign corporations - but great
social upheaval surely lies ahead for this country. Fascist states do not
usually abandon their power voluntarily. As injustices accumulate, so does
the pressure for rebellion. If the explosion occurs, as so many Indonesians
expect, on which side will the United States be?
Corporate codes are undoubtedly positive, as Levi Strauss maintains, but
they are not an answer to the larger problem. Companies aren't in a
position to pressure host governments like Indonesia's to liberalize labor
controls. Nor do they have any interest in campaigning for higher wages for
their factory workers. The low wages are why they moved there in the first
If things are to change, the pressure for reform has to come from other
governments - governments big enough to exert real leverage and principled
enough to understand that raising wages in places like Indonesia is
ultimately in everybody's interest. If the U.S. government declines to
embrace that cause, then American citizens must do the best they can on