The Struggle Inside: Labor Rights Violation Surrounding Pepsico’s Exit

The Struggle Inside: Labor Rights Violation Surrounding Pepsico's Exit

By: Alia Arraina Sandra and Danis Nayla Sakinah​​ 

The statement regarding PepsiCo's resignation drew a lot of reactions from the public. Most of whom felt disappointed, confused, and upset. As a result of this action, of course, inevitably many snack products and soft drinks under their auspices were withdrawn from the market. This is the result of the breakup of PepsiCo's collaboration with PT. Anugerah Indofood Barokah Makmur (AIBM), which carries out the packaging, sales, and distribution of products from PepsiCo. It is known the reason why the long-standing cooperation between PepsiCo and AIBM ran aground due to disputes between the two. An investigation by the NGO Rainforest Action Network found that there were violations of labor rights in the IndoAgri palm plantation owned by the Salim Group, which is the main company of the AIBM company, in North Sumatra.


According to the Roundtable on Sustainable Palm Oil where they received a complaint from the Indonesian Labour Rights Association (OPPUK), Rainforest Action Network (RAN), and International Labour​​ Rights Forum (ILRF) against PT. PP London Sumatra Indonesia Tbk (a subsidiary of PT. Salim Ivomas Pratama Tbk) regarding workers exploitation on two palm oil​​ plantations owned and operated by RSPO member and Indofood subsidiary PT. London Sumatra in June 2016.1​​ Key findings from the investigation in a report published by RAN, OPPUK, and ILRF titled, “The Human Cost of Conflict Palm Oil: Indofood, PepsiCo’s Hidden Link to Worker Exploitation in Indonesia”, conclude that:​​ 

  • Indofood categorized many of its long-time workers as temporary and placed them at heightened risk through precarious employment practices

  • Indofood paid its workers unethically low wages

  • Children worked on Indofood plantations

  • Indofood did not provide adequate health and safety protection for many workers, and casual maintenance workers were exposed to highly hazardous pesticides.

  • Indofood undermined Freedom of Association2


Violations allegations filed against PT. LONSUM related to labor rights violations is not the first time. The Institute​​ for Community Studies and Advocacy (ELSAM) also issued a position paper on "Human Rights Violations in the Oil Palm Plantation Area of ​​PT PP Lonsum Tbk-North Sumatra" in 2010. Derived from the results of ELSAM research from 2004-2007, by sending field researchers to PT PP's plantation Lonsum Tbk-North Sumatra in Deli Serdang, Serdang Bedagai, and Simalungun. ELSAM tried to dig up the testimonies of residents of Pargulaan Village, Simpang Empat Village, Cempedak Lobang Village, Naga Rejo Village, and Naga​​ Timbul Village regarding the practices of dominant human rights violations in the area.3​​ The violations cases that occurred among them ranged from incidents of using force, vandalism, and road blockades in land dispute resolution, application of arbitrary​​ working hours and systems, arbitrary wage systems, poor work safety protection systems, to child labor use..


In Indonesia, labor rights have been regulated in the Manpower Law, this law contains labor rights, especially regarding labor welfare. According​​ to Article 31 of the Manpower Law Number 13 of 2003 states that "every worker has the same rights and opportunities to choose, get, or change jobs and earn decent income at home or abroad", thus, employers must comply with this rule. Criminal sanctions that will be given to employers or employers who violate are given various forms of punishment, fines, and imprisonment.

The punishment for imprisonment of 2-5 years and/or a fine of Rp.200-500 million is given to people who employ or involve children in work. A prison sentence of 1-5 years and/ or a fine of Rp. 100-500 million is given to employers who do not include their company employees in the pension program. Sanctions for 1-4 years imprisonment and/or a fine of Rp100-400 million are given to parties who violate the provisions on4:​​ 

  • Employing Foreign Workers Who Do Not Comply With The Regulations (Article 42 Paragraph (1) And (2));​​ 

  • Employing Children (Article 68);​​ 

  • Employing Children In Light Work Not In Accordance With The Requirements (Article 69 Paragraph (2));​​ 

  • Does Not Provide Opportunities For Worship For Workers (Article 80);​​ 

  • Does Not Provide The Rightful Morning Rest For Workers Who Want To Give Birth (Article 82));​​ 

  • Pay Wages Lower Than The Minimum Wage (Article 90 Paragraph (1));​​ 

  • Obstruct The​​ Right To Strike Employees (Article 143 Paragraph (1));​​ 

  • And Not Re-employing Workers After Being Proven Innocent Or Giving The Right To Termination Of Employment (Article 160 Paragraph (4) And (7)).


The International Labour Organization (ILO), a specialized body of the United Nations with the mission to uphold social justice and globally recognized human and labor rights, is the primary international organization that implements and enforces international labor law. Its primary goals are to foster workplace freedom, facilitate fair job conditions, improve social security, and strengthen dialogue on workplace issues. The bulk of international labor law is derived from the ILO's labor laws.5


Labor law, internationally regulated under the International Labor Organization or known as ILO. The ILO's goals are stated in the Preamble to the ILO Constitution as well as the Annex to the Constitution titled Declaration concerning the aims and purposes​​ of the International Labour Organization (the "Declaration of Philadelphia"). These goals serve as the foundation for the creation of universal labor standards.

The International Labour Organization's Declaration on Fundamental Principles and Rights at Work. This declaration is binding on all Member States and binds them to respect and promote four types of values and rights, regardless of whether they have ratified the applicable Conventions. All four categories are freedom of association and the effective recognition of the right to collective bargaining, the abolition of involuntary or compulsory labor, the abolition of child labor, and the abolition of work and occupation discrimination (Article 2).6


In regards to ILO ratification K-138 by indonesian government, considering the regulations and indictment above, PT Lonsum failed to meet the deadline set by the complaints panel that had resulted in the Complaints Panel issuing the first letter of warning to PT Lonsum. Followed by a notice issued to SIMP as the parent. However, SIMP has failed to meet the deadline set by the complaints panel. By reason of the aforementioned breach of the decision by PT Lonsum and due to the extent of the breach, the refusal to engage constructively and collaboratively with​​ the RSPO decision that becomes evident that PT Lonsum and SIMP are refusing and unwilling to meet RSPO's standards and principles expected of its members. Hereby, they terminated the membership of SIMP as being the Parent of PT Lonsum with immediate effect.7


The issue of rights violation isn't new in labor fields. The emergence of manpower law and organization as well as institutions that regulate the rights and obligations of workers is an exact form of government guaranteeing protection for Indonesian workers in order to avoid any kind of oppression from certain parties. Labor rights violation in palm plantation is one of the violations that are often highlighted by the mainstream media. Indonesia, which is one of the largest importing countries of palm oil, obviously opens up many jobs for laborers. However, unfortunately, there are so many violations that go undetected. Labor rights violations are often undermined and underestimated, since the majority of workers do not have a voice, where most are small​​ people who are oppressed because of their economic conditions, even though they are the foundation and driving force for the running of an organization, agency, and company.







​​ Roundtable on Sustainable Palm Oil, 2016. Complaint.​​, April 16th 2021 (14.30)


​​ Rainforest Action​​ Network, 2016. The Human Cost of Conflict Palm Oil: Indofood, PepsiCo’s Hidden Link to Worker Exploitation in Indonesia.​​, April 16th 2021 (15.00)


​​ Lembaga Studi dan Advokasi Masyarakat, 2010. Pelanggaran Hak Asasi Manusia di Kawasan Perkebunan Kelapa Sawit PT PP Lonsum Tbk-Sumatera Utara.​​, April 17th April 2021 (12.44)



​​ SmartLegalID, 2019. “Sanksi di UU Ketenagakerjaan yang Wajib Diketahui oleh Pengusaha”​​, April 12th 2021 (20.45)


​​ ILO, 2014. Rules of the Game: a brief introduction to International Labour Standards.​​ 


​​ Ibid.


​​ RSPO Complaints Panel.​​