The Labor Union Act provides broad rights of association for workers, and workers exercised those rights. The law stipulates that 10 or more workers have the right to form a union. Union membership must be open to all workers, regardless of political affiliation, religion, ethnicity, or gender. Private sector workers are by law free to form worker organizations without prior authorization, and unions may draw up their own constitutions and rules and elect representatives. The Government records, rather than approves, the formation of the union and provides it with a registration number. In addition, the law provides that union dues must finance union activities, but does not indicate how dues should be collected or whether management has a role in collecting dues. A regulation that requires that police be notified of all meetings of five or more persons of all organizations outside offices or normal work sites applies to union meetings. The police periodically showed up uninvited at labor seminars and union meetings, which often had an intimidating effect. Under the law and registration regulations, 75 union federations notified the Ministry of Manpower and Transmigration of their existence. In addition, thousands of workplace-level units registered with the Ministry.

On February 25, the DPR passed the Manpower Development and Protection Act, following months of intensive consultations with unions and employers, both of whom rejected a July 2002 draft. The Act regulates collective bargaining, the right to strike, and general employment conditions. The Act does not apply to state-owned enterprises (SOE). The International Labor Organization (ILO) provided technical assistance in the development of the law, which generally met ILO standards. Some unions remained opposed claiming the law contained inadequate severance benefits, insufficient protection against arbitrary terminations, and legalization of child labor under some conditions. At year's end, the Government had issued some, but not all, of the required implementing regulations for the Manpower Act.

Government regulations prohibited employers from discriminating against or harassing employees because of union membership; however, there were frequent, credible reports of employer retribution against union organizers, including dismissals and violence, which were not prevented effectively or remedied in practice. Some employers warned employees against contact with union organizers. Some unions claimed that strike leaders were singled out for layoffs when companies downsized. On January 17, police in Tanggerang arrested Munawir bin Muhammed Sidik, a garment worker and union activist, for carrying a knife in the factory, P.T. Kharisma Kulit Indah, where he was employed. The Solidarity Center reported that during the days prior to his arrest, company-employed thugs assaulted Munawir in an effort to intimidate and fire him because of his union activism. On the day of his arrest, thugs again attacked Munawir and left him unconscious. Prosecutors charged Munawir with carrying a restricted weapon. On June 3, the court convicted him and sentenced him to 5 months in jail.

The country has three main trade union confederations. The Confederation of All Indonesian Trade Unions (KSPSI), formed by the government-directed merger of labor organizations in 1973, is the oldest trade union organization and remained the largest confederation. The leader of KSPSI concurrently served as Manpower Minister. Some employers and unions questioned whether the dual role created a conflict of interest in adjudicating disputes between unions or between companies and workers. The Indonesian Prosperity Trade Union (SBSI), established in 1992 and legally recognized in 1998, was often cited as the second largest confederation. In February, 12 national unions formed a new confederation, the Committee of Trade Unions of Indonesia (KSPI). KSPSI, SBSI, and KSPI together represented over 90 percent of all union members, according to the Solidarity Center.

There were credible claims of government interference in SBSI's Fourth Congress, held from April 27 to May 1. An opposition group within SBSI reportedly admitted that it received over $22,000 from the Manpower Ministry to oppose SBSI leaders and carry out disruptive activities. The resulting serious disputes within the Congress led to SBSI's ejection of 32 delegates. Some SBSI leaders attributed the interference to the Government's opposition to a new political party, the Social Democratic Labor Party, led by SBSI's former chairman.

The national social security agency, JAMSOSTEK, subsidized the operations of KSPSI and, to a lesser extent, SBSI and some other unions. Some trade union activists stated that such subsidies undermine trade union independence.

The law allows the Government to petition the courts to dissolve a union if its basis conflicts with the state ideology of Pancasila or the Constitution, or if a union's leaders or members, in the name of the union, commit crimes against the security of the State and are sentenced to at least 5 years in prison. Once a union is dissolved, its leaders and members may not form another union for at least 3 years. There were no reports of the Government dissolving any unions during the year.

The law does not address the adjudication of jurisdictional disputes among multiple unions in a workplace, and existing laws and regulations do not provide clear guidance on how jurisdictional disputes should be handled. Such ambiguity occasionally led to clashes between unions.

The law recognizes civil servants' freedom of association and right to organize. In 2002, employees of several ministries announced that they would form their own employee associations, and union organizations began to seek members. Unions also sought to organize SOE employees, although they encountered some resistance from enterprise management, and the legal basis for registering unions in SOEs remained unclear.

The law stipulates that unions may affiliate and cooperate with international trade unions and organizations. The KSPSI maintained international contacts and was an affiliate of the Association of Southeast Asian Nations Trade Union Council. SBSI was affiliated with the World Confederation of Labor and some international trade union secretariats. The newly formed KSPI established relations with the International Confederation of Free Trade Unions' Asia and Pacific Regional Organization (ICFTU/APRO). Other unions maintained contacts and affiliations with international labor federations.