Labour Rights Violation in the Global Supply Chain of the Palm Oil Industry

Joint Press Conference:

Transnational Palm Oil Labour Solidarity Network

The Transnational Palm Oil Labour Solidarity (TPOLS) received reports of alleged violations of basic labour rights in palm oil plantations. Based on reports from the union members, we found there are a number of similarities in employment practices that violate human rights and standards among transnational corporations. Such practice also contradicts with the so-called ‘sustainability’ policies claimed by the companies—which are the RSPO members.

In Musi Rawas, South Sumatra, Indonesia, one woman has been working as casual workers, responsible in maintaining the palm oil trees for years in a plantation owned by PT. Agro Kati Lama. Her wages were no more than IDR 1.400.000­ (USD—significantly below the Musi Rawas regional statutory minimum wages IDR. 3.195.273. For many years, she worked without a definite employment relationship. Her employment relationship as casual workers was outsourced to the third-party labour recruiter.

In East Kalimantan, workers in PT. Citra Agro Kencana were forcibly expelled by the company. The company accused workers of being to Covid-19 after participating in a demonstration in Samarinda—even though there was no medical evidence, and while workers themselves had undergone an independent rapid-test. Meanwhile, workers in PT. Kutai Agro Lestari found their BPJS contributions (statutory health and employment insurance program), which was deducted from their income, have not been paid by the company.

In Kutai Kartanegara district, PT. Jaya Mandiri Sukses and PT. Suryabumi Tunggal Perkasa, two plantations supplying palm oil fruits to the Bangkirai mill owned by PT. Jaya Mandiri Sukses, pays its workers below the minimum wage with poor housing facilities and without rights to leave.

Although the workers on the five plantations work under different companies, their working conditions are quite typical. The TPOLS network found common employment practices by most of the plantation company.

Such practices include the recruitment of workers through third parties (labour recruiter or outsourcing agency). Most of the workers are recruited under the status of casual workers, where the employment relationship is being outsourced to the third-party, meaning they do not have any official employment relationship with the company. The workers are recruited without a clear and written work agreement—some of which is written with a pen on a piece of paper.

In terms of the wage system, the plantation companies generally apply a piece-rate system. This wage system applies to all categories of core work in palm oil production: from seeds nursery, maintenance, to harvesting. Through this system, workers are paid based on how many tonnages of harvested bunch of palm oil fruits, or how many sacks of loose fruitlets are collected, how many hectares of area have been sprayed with herbicides or applied with chemical fertilizers.

This wage system is the roots of meagre wages. “At most, I earn IDR. 1,600,000 (USD 110) in a month. But that is a rare occasion. Normally, I earn around IDR 1,400,000 (USD 97),” said Endang (35 years), a casual female worker at PT. Agro Kati Lama. Her wages­­—and hundreds of other casual workers—amounted to less than half of the Musi Rawas statutory minimum wages in 2020, which amounted to IDR. 3,195,273 (USD 225)

In order to earn a daily rate of wage, this wage system forces workers to work hard, fast and often involves their family members—including children, such what is occurring in PT. Kutai Agro Lestari and PT. Jaya Mandiri Sukses. In most cases, the company has always argued that it never recruits child labour. However, the definition of child labour does not necessarily mean a child who is formally recruited by a company. The piece-rate wage system, coupled with heavy workload, has given birth the child labour.

Plantation workers in the five companies also work in extremely poor health and safety conditions. When the palm oil tree maintenance cycle turns into fertilization phase, the daily workers (BHL – buruh harian lepas) are targeted to apply 500 kg of fertilizers in a day. Astuti (45 years old), another daily worker, complains about eye and skin irritation whenever she finishes applying fertilizers. “Our eyes and hands feel sore if the fertilizers are exposed to us,” Astuti said. “I had eye sore for two days because of irritation due to fertilizers.”

The vulnerability of plantation workers, both in harvesting and maintenance, is exacerbated by the lack of effective personal protective equipment (PPE). Women maintenance workers who spray toxic herbicides/ pesticides or apply chemical fertilizers are generally only provided with a sheet of cloth mask—on an irregular basis. Workers in the five plantations also reported that most of them had to pay for themselves to equip themselves with the simple PPE.

No	Plantation Company	Location	Palm Oil Mill	Holding Company	RSPO Membership Number	Buyer
1	Citra Agro Kencana	East Kalimantan	Ketapang Agro Lestari	First Resources	1-0047-08-000-00	Nestle
Workers’ complaints: 1) unilateral termination, and forced expulsion, 2) no paid menstrual and parental leave, 3) suspension of wage payment, 4) recruitment mechanism for core production work through third party, 5) piece-rate wage system with heavy workload, 6) alleged union busting
2	Jaya Mandiri Sukses	Kutai Kartanegara, East Kalimantan	Bangkirai Mill PT. Jaya Mandiri Sukses	Eagle High Plantation	1-0048-08-000-00	Nestle
3	Suryabumi Tunggal Perkasa	Kutai Kartanegara, East Kalimantan				Nestle
Workers’ complaints: 1) annual religious allowance paid in instalment without workers’ consent, despite the business activity remains normal during Covid-19, 2) poor housing facilities, 3) wages paid below minimum wages, 3) employment relationship outsourced to the third party, 4) child labor, 5) poor health and safety protection, 6) no paid leaves, 7) no provision of working tools
4	Kutai Agro Lestari	East Kalimantan	PT. Kutai Agro Lestari	CT Agro Kaltim	n/a	Nestle
Workers’ complaints: 1) wages paid below minimum wages, 2) Embezzlement of BPJS (employment insurance) monthly fee deducted from wages, 3) no paid leaves, 4) annual religious allowance paid in instalment without workers’ consent, 5) poor housing facilities, 6) prolonged casual status without being promoted to become permanent workers, 7) poor health and safety protection without proper and effective PPE 8) child labor, 9) termination without compensation
5	Agro Kati Lama	Musi Rawas, Sumsel	PT. Dendymarker Indah Lestari	SIPEF Group	1-0021-05-000-00	Nestle
			PT. Sawit Mas Sejahtera	Golden Agri Resources	1-0096-11-000-00	Nestle
Workers’ complaints: 1) employment relationship outsourced to the third party, 2) poor health and safety protection without proper and effective PPE, 3) wages paid below minimum wages, 4) no paid leaves, 5) prolonged casual status without being promoted to become permanent workers

At least in the last 5 years, various investigative reports and research have revealed a number of forms of exploitation of palm oil plantation companies against its workers. From Medan to Boven Digoel, and from South Sumatra to Central Sulawesi, transnational companies that claim to run their business in a ‘sustainable manner’ have, in fact, committed a number of human rights violations.

As indicated in recent investigative reports by the Associated Press, TPOLS also found a connection between what happened in the plantations in South Sumatra and East Kalimantan to the global supply chain of the industry. The plantation companies here are part of a transnational company operating across continents. These companies also operate in various regions in Indonesia.

On further investigation, TPOLS also found that the five plantations above supplied fruit that had been processed to Nestle as the Buyer. In Nestlé’s supply chain disclosure: palm oil (April 2020), the company that manages purchase of palm oil to Nestle from five plantation companies, including 1) Archers Daniels Midland, 2) Bunge Loders Croklaan, 3) Cargill, 4) Wilmar , 5) Fuji Oil, 6) Gemini Edibles & Fats, 7) LDC India, 8) Oleo Fats, and 9) City Golden Hope.

If we take the global supply chain into account, then the poor working conditions at the upstream production level are under the full responsibility of the parent company and the buyer. SIPEF Group, for example, claims to have a ‘Responsible Plantation Policy’ which includes policies on occupational health and safety as well as human rights. Nestle, on the other hand, has also adopted No. Deforestation, No Peat, No Exploitation(NDPE) policy.

The finding of alleged violations of basic labour rights reported by members of the TPOLS network indicates the ineffectiveness of the ‘sustainability’ policies claimed and promoted by the global palm oil industry. At the same time, this fact also shows the weakness of supervision on the part of the Indonesian government in ensuring the responsibilities of the companies operating in Indonesia.

We demand the palm oil plantation companies, the parent company and the buyers:

• 1) To improve the working conditions, especially regarding the employment status, occupational health and safety, wages, and other basic rights as stipulated in the Indonesian Labour Law
• 2) To conduct an independent grievance verification with the competent and credible third party, especially in the fields of labour and human rights. The independent trade union, in this case, SBSS, and the works should be involved and interviewed directly by the independent team without the presence and intervention by the company, and be ensured that there will be no retaliatory action towards the workers and the independent trade union. The identity of the workers shall be remained confidential.
• 3) To publish the corrective action plan regarding the findings about alleged labour rights violations with a measured implementation plan and timeline
• 4) To promote all daily/ casual workers, and other contract/ outsourced workers to become permanent workers, especially for the women workers.
• 5) To ensure that the core company’s policies are implemented and monitored at all levels. SIPEF, as a holding company, should focus more on the supplier bases that are at high risk in violating labour rights.

For the Government of Indonesia:

• 1) To carry out effective and comprehensive supervision and investigation with active participation of workers and labour unions.
• 2) In order to achieve the first goal, the Government of Indonesia needs to increase the numbers of personnel of the Manpower Office to routinely and effectively monitor the compliance of plantation companies.
• 3) To give sanctions for companies that are proven to have violated basic labour rights
• 4) To ensure the fulfilment of basic labour rights in accordance with the principles of work and decent living with job security

Jakarta, 20 November 2020

 

Contact Person

• SPN Kaltim: Kornelis (+62 813-4814-5654)
• SBSS: Robiyansih (+62 852-7326-5048)
• TPOLS Coordinator: Rizal ([email protected])
• KBS Coordinator: Hotler Parsaroan (+62 858-4652-9850)