Labour has become a contentious issue in the palm oil sector over the past few months. Those within the palm oil community will be well aware that negative claims around labour have been made against palm oil for years, dating back to 2015 at least. However, when it comes to labour, NGO’s claims have often been indiscriminate. Activists have used a small number of examples in the region to argue that palm oil – regardless of where and how it is produced –is ‘contaminated’ with labour rights or human rights violations, including human trafficking and slave labour. 

This also includes palm oil produced by Indonesia’s 2.7 million smallholders. Clearly this is absurd, but the claims continue to be made, whether it is in reports funded by the Norway government and so-called philanthropic organisations, or Western agriculture groups seeking yet another way to block palm oil from their wealthy markets. 

In terms of governments and global policy, the US government has been one of the key and main governmental actors for raising labour rights and standards. European governments have tended to focus more heavily on environmental and climate change concerns rather than labour standards and poverty reduction. The US government approach is slightly different from other intergovernmental actors such as the International Labour Organisation. The ILO works closely with governments and civil society – as it has for many years with the Indonesian palm oil sector -- to improve practices, compliance and enforcement.  The US government does this too; but it is also prepared to call things as they are and call out bad behaviour when it sees it – and penalise it with trade sanctions. 

What do these bodies have to say about Indonesia’s palm oil sector? The US State Department’s most recent Trafficking in Persons report has generally given Indonesia’s palm oil sector a positive report, despite NGO claims. One of the key reasons for this is that Indonesia is generally a source of trafficked labour, rather than a destination for trafficked labour. Indonesia often finds itself on the bad end of exploitation. It is for this reason that the Indonesian government has established the Indonesian Migrant Worker Protection Agency (BP2MI), for example, which operates a hotline to protect Indonesian workers overseas. 

It is also worth pointing out that Indonesia is considered a ‘tier 2’ country on the US State Department report; this is a classification shared by wealthy countries such as Italy, Germany and Norway. The report is not perfect for Indonesia. It states that trafficking and exploitation of workers still takes place within Indonesia. But this is not the main concern of the US State Department nor the ILO when it comes to palm oil. 

The US and the ILO are currently both collaborating with the Ministries of Agriculture and Manpower, the Coordinating Ministry of Economic Affairs, the Indonesian Palm Oil Association (Gapki) and the country’s trade unions to improve worker rights across the sector as part of a two-year program.This coordination between Jakarta, Washington and the ILO clearly indicates that the Indonesian government and the industry are well aware of the problem and taking steps to address it.  Similarly, the ongoing collaborations between some of Indonesia’s largest plantation companies, civil society and certification organisations indicate the industry’s willingness to face the challenge. 

At a recent symposium on labour rights co-hosted by Gapki and the ILO it was readily apparent that the challenges of improving labour rights in the palm oil sector will continue. This is true for two reasons. First, the industry is becoming more significant in areas such as Kalimantan, and operations in those regions are now under greater scrutiny. Second, the fluidity of Covid-19 has made it difficult for companies to maintain human resources capacity; it has similarly made it difficult for labour agencies to engage in on-site inspections. 

However, there is an additional tool that can and will assist the industry going forward, and assist importing nations that need assurances around Indonesia’s exports: ISPO or Indonesia Sustainable Palm Oil certification. ISPO certification requires companies to adhere to all labour requirements, whether they are paying minimum wages, in compliant to occupational health and safety regulations (K3) or adhering to human rights principles such as “no child labour” and “no slavery”. 

The key message behind Indonesia’s international collaborations, business-government collaborations and certification initiatives is that Indonesia is not pretending that problems do not exist. But nor is the industry ‘rife’ with exploitation as some activists in the West would argue. Indonesia as a whole takes this problem seriously and as part of a national commitment to social welfare.

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Fadhil Hasan is a senior economist at the Institute for Development of Economics and Finance (INDEF).
The views expressed in this article are those of the author and do not necessarily reflect the views of the Jakarta Globe.