After the fall of President Suharto in 1998, there was a serious political liberalization of trade union organizing. One of the first things carried out by President B.J. Habibie was Indonesia's ratification of the International Labour Organization's (ILO) covenant of trade union rights. Legislation soon followed. This ended the thirty-two years of state-controlled trade unions. Since then, unions have been established in thousands of enterprises, and several union confederations and federations have formed. Despite the multiplication of unions and the end of direct state intervention into the unions, the union movement remains a basically impotent force in Indonesian political life. It has totally failed in all its major campaigns aimed at reversing or reforming government policies.

There was a period between 2010 and 2013 when most of the unions united to conduct a series of campaigns—first around health insurance legislation and then wage increases—which had some success. In fact, the campaign demanding that the parliament pass health insurance was a major success. Between 2010 and 2013, militant campaigns involving rallies, pickets and, in 2013, some strikes also won very large increases in a minimum wage, sometimes over fifty per cent. These increases were embodied in formal government decisions setting a minimum wage for different economic sectors and in different municipalities and districts. These decisions were made on the recommendation of tripartite committees in district governments in an atmosphere framed by escalating worker militancy.

But even in 2013 it was looking increasingly the case that these were all pyrrhic victories. First, many employers, while forced to accept the wage rises in formal agreements, still either delayed or, according to union activists, simply did not pay the agreed increases. Second, and this is perhaps the most serious factor, many firms employed workers through labour hire companies—a practice in Indonesia called “outsourcing”.

Outsourcing has long been illegal in Indonesia for work associated with the primary production processes of a business. It is only legal for the more peripheral work such as security guards, catering for workers and so on. However, unions constantly complain that many businesses still employ people via “outsourcing” for primary production process work.