The manner in which the New Order fell, the policy changes towards trade unions that occurred in 1998 under President Habibie, and the new economic situation impacted on the preexisting labour politics to change their terrain fundamentally. Most obviously, the policy of having only a single union ended, allowing the formation of a range of unions independent of each other. However, the change was more significant than that. New processes were set in motion that, while unfolding slowly and with difficulty, are already dramatically transforming trade union politics, and potentially may change national politics in general.

The Fall of the New Order

The thirty-three years of authoritarianism under Suharto did not end as part of a planned succession. Suharto departed the scene accompanied by significant turmoil and rejection of the old authoritarian order. The slogan of the process that brought him down was: Reformasi! (Reformation), implying a deep reform to policy and methods of rule. Withdrawal of the armed forces from politics, in particular from political control (repression), and withdrawal of laws curtailing political freedoms were central demands of most protests, along with a demand to end corruption and cronyism. Between June 1996 and May 1998, hundreds of thousands of people participated in street mobilizations and other actions. While many were students, the vast majority were from the working class, employed, underemployed or unemployed.

Suharto's being pushed into resignation after an extended period of oppositional mobilization involving large numbers of the working population meant that there remained a dynamic contributing to ongoing worker protests. Despite the fact that the existing large union, the FSPSI, was anti-mobilization, that the SBSI was cautious about it, and that the PPBI was small and more an organizing centre than a consolidated member-based organization, worker protests continued in the period immediately after the fall of Suharto. Such protests were carried out either by workers at single factories organizing independently or, in the majority of organized cases, by the PPBI. The press reported strikes and protests in most months from June through to December even in 1998. In fact, there was a significant increase in such activity compared to the previous year.