The Positive Correlation Between Corruption and Workers’ Misery


By: Dr. Muchtar Pakpahan, SH, MA

I often said that rampant corruption would make workers suffer. Why? Because high economic costs which stemmed from corruption usually force businessmen to cut costs from the most flexible production cost, which in this case workers’ wages. Prices of raw materials are already fixed, tax payments are also fixed and so is transportation cost. Therefore this is where the positive correlation between corruption and workers’ misery come in.

In his courtroom defense in 1937 entitled “Indonesia is suing”, Soekarno said “my intention to get Indonesia independent is because I wanted to build a welfare state which runs based on social democracy such as in the Country of the Lord.”


When Soekarno became proclamator, he and his colleagues drafted the 1945 Constitution and included the welfare state idea in the opening and body text of the 1945 Constitution. I will begin with an important statement in the Opening of the 1945 Constitution. The fourth paragraph, ”……. in order to form a government of Indonesia and the entire homeland of Indonesia, and in order to advance general prosperity, to develop the nation’s intellectual life, and to contribute to the implementation of an everlasting world order based on…”


Now I would like to explain more about the opening text, especially about the paragraph that was made as the basis to build a welfare state, the paragraph on general prosperity and to develop the nation’s intellectual life, as stipulated in articles in the 1945 Constitution and an understanding about the International Labour Organization. First Article 31: every citizen is entitled to a 9-year education and the state has the obligation to cover the expenses. Article 27: every citizen is entitled to get a job and decent life. Article 34: the state takes care of the poor and neglected children. Article 34 jo 28: the state advances the public’s health.


But reality showed that the welfare state idea had never materialized. Why? I once read in the media that the illiteracy rate in people aged more than 45 years old reached 9.7 million, anf real unemployment rate is 9 million. There are so many beggars at every intersection. Medical expenses are very expensive and people die because they couldn’t afford medical treatment. The government couldn’t cover all that because it said it didn’t have money.


The next question is, why isn’t there any money when Indonesia’s natural resources makes up 65% of the natural resources found in Asia-Pacific (APEC, Kyoto 1995). The answer is because corruption is rampant in all public service sectors.

Indonesia is one of the most corrupt countries in the world, ranking 182, and tops the rank both in Asia Pacific and Asia, followed by Cambodia. In 1994 I found out that corruption in the construction and security sectors reached 30-40%, non-voting stocks 10-50%. Commission service and security industry 10-20%, non-voting stocks 10-30%. Export/import commission/security 20-30%, and non-voting stocks 0-20%, while labor cost was only set at 8%. The officials who received/enjoyed corruption money consider that as normal.

The corruption that I mentioned above created social injustice and social gaps. 70% of national assets lie in the hands of 200 tycoons.



When I served as Governing Body ILO 1999-2005 and Vice President of World Confederation of Labour, I had the opportunity to visit all prosperous countries. In each of those countries I found three things, they were welfare states; their governments adopted the principle of good governance; and they had strong civil society which was marked by strong labor unions.


In brief, we want to build a prosperous society, at least in line with the articles I mentioned earlier in which all citizens could enjoy education of at least until junior high school (in other parts of the world it’s senior high school minimum); Everyone must be employed, the state will pay for living expenses of those who are jobless; no beggars on the sides of the streets because the state takes care of them, educate them and empower them to become normal people; Anyone who is sick can immediately seek treatment at a hospital because the government provides health social insurance; the state guarantees that all citizens live in decent homes, no one should be homeless; everybody has pension funds, that when they reach 60 years old they can quit working and enjoy their pension benefits; and everyone is free to choose any religion and the government guarantees that they can practice their religions and beliefs.


I can say that the Soeharto, Habibie, Gusdur, Megawati and SBY administrations have failed to create the welfare state because our government and bureaucracy are corrupt and we’ve even been labeled as the most corrupt country in the world. Corruption is rampant because the civil industry remains weak.

The Soeharto administration created a single labor union called All Indonesia Labor Union (SPSI) and turned it into a political tool to support the government’s policies. When I initiated establishing the Indonesian Prosperous Labor Union (SBSI) with KH. Abdurrachman Wahid, Sabam Sirait and Suko Waluyo as an alternative civil industry on 25 April 1992, the government immediately turned SBSI into its enemy. The Soeharto administration even labeled SBSI as illegal, communist, and underground organization and jailed me twice for it.

A labor union as a civil strength is crucial because industry players are suffering due to bad governance, and corrupt government. Workers badly need a fair industrial profit sharing. And this can only be possible if the government is free from corruption like countries with the most prosperous workers in the world such as Finland, Sweden, Norway, Denmark, New Zealand, Singapore, Switzerland, Japan and Canada.


Corruption not only brings misery to workers but also to farmers and fishermen. Farmers find it difficult to buy fertilizers at an affordable price and they also don’t get any protection to sell their crops. Fishermen don’t get any protection at sea from foreign fishermen who steal our fish and they don’t get any guarantee for fuel, net and ice supplies.

Indonesian workers are among those who receive the lowest wages in the world. Our farmers and fishermen are also among the poorest in the world. Indonesia is a country controlled by neoliberals. Fighting poverty, corruption can only be done conceptually, well-planned, programmed and sustainably.

Labor unions must take part in the movement to stop corruption. Labor unions should no longer only make their move when it concerns industrial matters. It’s true that unfair industrial relationship is the source of the workers’ misery, but rampant corruption is also the source of workers’ misery. Labor unions which are now grouped under MPBI (Indonesian Workers Council) should make anti corruption drive as one of their main tasks.