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eforms and bring the central bank back under public authority they would face an immediate downgrade by the big three rating agencies the suspension of bilateral lending under the paris club and the oecd common framework and in a worst case scenario sanctions the technical question of what industrial policy is in practice subordinate to the political question of who will allow it proponents of industrial policy both from the heterodox perspective and of the new bretton woods vintage may therefore be constructing an unrealistic standard by holding up cases like south korea while ignoring the geopolitical conditions that enabled them the world bank s matrix of appropriate interventions implicitly assumes a country that can choose for the majority of the global south choices are objectively constrained for the vast majority of countries in the global south industrial policy will have to be preceded not followed by a prolonged struggle to oust entrenched landed and mercantile interests that work in tandem with us imperialism to stymie industrialisation the very process of taking on those interests can push countries into a siege economy that permanently postpones the industrial project it was meant to enable what siege economy means in practice is best read off the cases of countries that survived imperial retaliation without succumbing to it iran s resistance economy eqtesad e moqavemati a doctrine formalised by ayatollah ali hosseini khamenei in 2014 in the wake of the 2010 12 sanctions tightening is the most explicit recent attempt to articulate sovereign industrialisation as a defensive posture emphasising domestic production knowledge based industries and reduced oil dependence cuba s option zero opción cero a contingency plan drawn up after the collapse of the soviet union to survive with the barest minimum of resources is another example none of these are the preferred policies they are policies that have been imposed by the pressures of imperialism decades of adaptation under imperial pressure produce survival not industrial development national scale resistance hits limits that only a reformation of the international economic order can transcend we live in a conjuncture where the spheres of economics and politics are more overtly entangled than at any time since the early cold war the contradictions of an international order that preaches industrial policy and enforces rentierisation that praises derisking and refuses debt restructuring are no longer plausibly deniable for the global south there is no such thing as an industrial policy that does not confront the entrenched power of rentiers foreign and domestic confrontation in turn requires political strategy and contingencies for the inevitable retaliation the world bank s new report is a useful symptom but it is not a programme the programme will have to be written elsewhere shiran illanperuma is a researcher at the tricontinental institute for social research https developingeconomics org 2026 05 29 industrial policy between rentierisation and retaliation feed 0 8038 shiran1354a12ee4 stabilising wages fragmenting workers what comes after indonesia s wage ruling https developingeconomics org 2026 05 15 stabilising wages fragmenting workers what comes after indonesias wage ruling https developingeconomics org 2026 05 15 stabilising wages fragmenting workers what comes after indonesias wage ruling comments fri 15 may 2026 07 31 00 0000 http developingeconomics org p 8015 what actually constitutes the key agenda for workers in indonesia beyond celebrating may day as a symbol of struggle wages in indonesia are never truly negotiated they are determined stabilized and at the same time separated from the political power that should be able to challenge them since the authoritarian new order regime the state has built a corporatist framework that not only suppresses independent worker organizations but also fragments the possibility of forming an effective collective force reformasi did open space for freedom of association yet instead of producing consolidation what emerged was fragmentation many unions but weak and divided thus when integrated into global value chains this configuration finds its function the state no longer needs to repress workers overtly it suffices to stabilize wages through mechanisms that appear technocratic while allowing fragmentation to persist in this way low wages in indonesia are not a failure but rather the result of a strategy historically shaped and continuously reproduced a form of partial class accommodation uneven and spatially conditioned control over workers today no longer operates primarily through open repression but through the way wages are calculated and normalized as a technical matter wage setting formulas that link minimum wage increases to inflation and economic growth are presented as rational policies to maintain balance between worker and business yet this is precisely where the politics operates wage conflict is removed from the arena of collective bargaining and locked into calculations that from the outset limit bargaining space this shift becomes clear when compared to the mechanism based on decent living needs khl which although not entirely free from depoliticization still opened space for surveys and the articulation of demands particularly in industrial areas with high concentrations of workers because it was seen as disrupting worker cost stabilization this space was later closed through formulas that standardize increases while simultaneously dampening conflict concessions to workers are not entirely eliminated but emerge as the result of struggles that under certain conditions succeed in forcing the state and capital to grant space as in the case of thr and the expansion of social security through bpjs however these achievements do not alter the fundamental structure of wages which remains low and fragmented rather they appear as limited and segmented compromises thus what is produced is not merely wage stabilization but also the management of workers power itself on the one hand there are forms of protection that are concentrated and appear progressive while on the other the underlying structure continues to maintain spatial differentiation and the collective weakness of worker in this condition class compromise does not occur comprehensively but is produced partially unevenly and remains locked within a low wage regime historical roots depoliticising workers the roots of indonesia s industrial relations configuration cannot be reduced to a mere chronological stage of industrialization but rather must be understood as the outcome of how the state has shaped and managed power relations between worker and capital compared to south korea authoritarian regimes did suppress worker organizations yet they did not entirely close off space for the articulation of opposition the existence of the korean confederation of trade unions kctu which emerged in opposition to the federation of korean trade unions fktu demonstrates that class conflict remained institutionalized albeit in limited and often repressive forms this cannot be separated from the model of industrialization pursued by the state in which through mechanisms of reciprocal control the state not only regulated worker but also disciplined capital by linking access to credit protection and state support to productive performance and export orientation within this configuration industrial expansion did not merely generate economic growth but also indirectly created the material conditions for the emergence of a more organized worker force capable of enhancing its bargaining power in contrast the indonesian as a late industrial country case reflects a different logic of state accommodation during the authoritarian period rather than developing disciplinary mechanisms toward capital the state constructed a form of corporatism designed to control and simultaneously fragment worker organizations from the outset structures such as the all indonesia workers union spsi functioned not merely as representative bodies but as instruments to ensure that worker remained fragmented and disconnected from the possibility of autonomous political articulation unlike in south korea where worker opposition could still emerge within constrained spaces depoliticization in indonesia operated more deeply and systematically this condition later became the foundation for the post crisis configuration when integration into the global economy further intensified the state s need to maintain worker cost stability thus worker fragmentation in indonesia is not an anomaly but a historical product of a model of state accommodation that from the beginning did not allow space for the consolidation of working class power reformasi did open opportunities for the revival of worker organizations and even political representation such as the worker party however this space continues to operate within boundaries defined by the imperative to maintain an investment friendly climate in this context the emergence of the worker party is often read as a form of opposition yet in practice it does not fully exist outside existing power structures participation in electoral politics necessitates compromise and under conditions where worker remains fragmented such compromises become difficult to avoid as a result rather than fostering broader class consolidation worker s political representation risks being absorbed into elite logics thereby reinforcing the very pattern of fragmentation it seeks to overcome wage calculation as political control if previously wage regulation through the decent living needs khl survey mechanism still opened space albeit limited for class compromise through tripartite forums then over the last decade that space has gradually been closed wulansari 2015 indeed from the outset khl was never entirely detached from the logic of depoliticisation since negotiations took place within an institutional framework already constrained by the state nevertheless it still provided room for workers to articulate demands through surveys and negotiations that were more political in character particularly in regions with high industrial concentration the shift toward a wage calculation formula based on macroeconomic indicators marked a more fundamental transformation conflict was no longer managed through negotiation but instead absorbed into technocratic mechanisms that predetermined its limits from the outset in this context wage regulation no longer functioned as an arena of compromise but rather as an instrument of control through which the state stabilised labour costs while effectively restricting the space for workers collective articulation departing from the transformation of data into index form base year 100 this graph should be read not as a comparison of absolute values but rather as a comparison of the relative growth rates between output and wages the gdp per capita line represents the growth of average output per person while the real wage line indicates the development of workers purchasing power when the two lines move together it suggests that output growth is relatively accompanied by wage increases however when the gdp per capita line rises more rapidly and diverges from the real wage line this indicates the existence of a distributional gap in this context the difference or distance between the two lines can be read as a simple proxy for wage share namely an indication of how much of output is relatively translated into workers income the wider the gap the smaller the share received by workers relative to the value produced this reading must also be situated carefully in relation to the common macroeconomic claim that gdp per capita is not equivalent to income or wages conceptually this claim is correct gdp encompasses all value added within the economy including profits rents and other forms of capital income and therefore cannot be equated with individual wages yet it is precisely because of this distinction that the comparison between gdp per capita and wages becomes analytically important the graph does not seek to equate the two but rather to demonstrate that this inequality is systematic and develops over time following thomas piketty 2014 gdp per capita is indeed not a measure of income distribution but a measure of total output in other words the larger the gap between the two indices the clearer it becomes that output growth is not proportionally distributed to workers when observed periodically this dynamic can be divided into three episodes of wage politics demonstrating that the relationship between economic growth and wages is not automatic but rather determined by power relations within the production process in the first period from the post crisis era up to the years preceding 2012 the two indicators remained relatively close although a tendency toward divergence was already visible as the gdp per capita index increased from around 100 to approximately 450 while the real wage index rose only to around 210 220 indicating that from the early recovery phase output grew faster than workers purchasing power without hindering economic growth the second period around 2013 2014 instead showed a temporary narrowing of the gap when the real wage index increased by around 30 60 points while the gdp per capita index declined by approximately 30 points this dynamic did not reflect the negative impact of wage increases on the economy rather it demonstrated that economic value is the result of social labour dependent on workers activity such that when political mobilisation occurred as in the grebek pabrik bekasi actions of 2012 through strikes and production stoppages output could be temporarily disrupted while simultaneously revealing workers central position within the production system the movement that began in bekasi subsequently spread to various regions where workers succeeded in pushing for minimum wage increases which in bekasi itself exceeded 30 percent while also expanding organisational capacity and collective political consciousness however in the third period after 2015 following the institutionalisation of the wage formula divergence widened consistently once again with the gdp per capita index increasing from around 400 to more than 600 while the real wage index rose only from around 300 to approximately 420 even during the covid 19 pandemic period around 2020 when the economy experienced contraction a decline of around 30 points real wages tended to stagnate and during the subsequent recovery phase output once again grew more rapidly than wages overall this pattern demonstrates that economic growth has proceeded alongside restrictions on wage increases thereby widening the gap between the value produced and the value received by workers reflecting a tendency toward contained wage growth within the contemporary wage regime from the outset of the post...