Author: Dian Amalia Ariani
For some extractive industry workers, social issues aren't technical terms that appear in curiosity reports. They manifest in the form of long working hours, questionable overtime pay, limited negotiation space, and even terminations without dialogue.
Junaid Judda, Chairman of the Mining and Energy Industry Workers Union (SPIBE) of the Bantaeng Industrial Area, South Sulawesi, said the issues most frequently complained about by workers include the implementation of the minimum wage, overtime payments, leave for female workers, and minimal worker involvement in company decision-making.
"Every policy the company wants to take does not involve workers or trade unions," Junaid told Prohealth, Friday, May 22, 2026.
According to him, there's also virtually no room for dialogue when workers face layoffs. Workers are often summoned directly to the office and receive a notice of termination without explanation or negotiation.
Stories like these contrast with the voluminous recommendations from mining companies. These documents include climate targets, governance commitments, and Environmental, Social, and Governance (ESG) strategies. However, are worker protections and community participation progressing at a rapid pace?
This pattern is reflected in the Katadata ESG Index (KESGI) data for the 2021–2024 period. In the coal sector, the governance score ( governance ) consistently tops the social score ( social The median governance score ranged from 49 to 50 throughout the study period, while the social score only increased from 23,8 in 2021 to 35,4 in 2024.
This means that mining companies appear to be increasingly accelerating their compliance and governance efforts. However, protections for workers, surrounding communities, or social operational pathways have not progressed at the same pace.
This disparity is even evident in companies with high ESG scores. In the coal sector, for example, PT Alamtri Minerals Indonesia achieved a governance score of 70,5, but a social score of only 32.
"The disparity between governance and social scores appears to be a common pattern in the coal sector," said Fitria Purnamasari, ESG Data Analyst at KESGI, on Friday, May 22, 2026. According to her, companies are relatively quicker to strengthen formal aspects such as presentation, transparency, reporting, and desired structures than to improve more complex social implementations on the ground.
Social aspects, said Fitria, specifically regarding issues that are difficult to measure and difficult to resolve: human rights, protection of affected communities, occupational safety, relations with residents around the mine, and supply chains and vendors.
"Most companies still focus on employment aspects and community programs. Meanwhile, human rights issues... due diligence "Social assistance, protection of affected communities, and supply chain accountability are still very limited," he said.
In the industrial sector as a whole, social aspects have indeed increased by almost 20% over the past four years, but the pace hasn't even been enough to catch up with other pillars. By 2024, social scores will remain the lowest, with environmental sustainability and corporate governance underdeveloped.
So why are companies quicker to fix governance than the impact on people?
Governance is easy to measure, social impact is not
According to Victoria Fanggidae, Executive Director of The PRAKARSAGovernance has long been the aspect most regulated by regulators and readily accessible to the public, especially for public companies. This gives companies a greater incentive to comply.
"Governance primarily regulates internal company relationships, such as those involving the board, management, and shareholders. Meanwhile, social aspects affect employees, communities, suppliers, and future generations, whose interests are often conflicting and difficult to balance," Victoria told Prohealth on Saturday, May 23, 2026.
As a result, social aspects are often positioned as additional matters.
He believes governance is also easier to police. Companies can appear administratively compliant simply by establishing new structures or policies, without substantial changes.
“The company can be seen obedient "In terms of governance, it only involves changing the formal structure without changing the substance. Meanwhile, real social improvements are much harder to fake because their impact is felt directly by the people," he said.
The statement explains why ESG in the extractive sector is often strong in documents, but not necessarily strong in the experiences of workers or citizens.
The social pillar of ESG typically includes indicators such as workplace safety, community relations, employment, diversity, human rights, and impact on surrounding communities.
However, according to Ria, the indicators currently used are more like administrative compliance reports than a reflection of real conditions.
"Companies report on how much training they provide, not whether worker well-being has improved. They report on the value of community investments, but not whether the lives of local residents have improved," he said.
In other words, ESG often measures how many programs are implemented, not what the results are.
Another problem is that ESG assessments are still predominantly top-down. Companies are the ones who determine the indicators, collect the data, and report their own achievements.
"The perceptions, complaints, and direct experiences of workers or affected residents are rarely primary sources of data," he said.
Yet, the greatest social impacts of large companies often occur in the lower-tier supply chains of mines, factories, or small suppliers that are barely visible by standard ESG indicators.
Workers are not involved
Junaid said the issues that are most often ignored by companies include long working hours, implementation of minimum wages, overtime payments, leave for female workers, and work safety.
According to him, workers are often not even involved in the company's decision-making process. In cases of layoffs, workers usually receive a direct notification letter without any dialogue with the union.
"As long as companies carry out unilateral layoffs for certain reasons, they provide absolutely no room for workers or trade unions to participate in negotiations," he said.
Junaid stated that since the end of last year and into the past few months, dozens of workers at several smelter companies have been laid off for efficiency reasons. The union recorded more than 80 workers being laid off, while many cases were processed without prior dialogue with the workers or the union.
"On average, those who are laid off are immediately summoned to the office and given a notice of termination. There's no discussion about why they were laid off," Junaid said.
In addition to layoffs, labor unions are also advocating for alleged underpayments of overtime wages. According to union calculations, some workers with years of service could potentially experience accumulated overtime underpayments amounting to tens of millions of rupiah per person.
Other issues mentioned include the union of other female workers who withdrew because their maternity or birth leave applications were not filled, the use of short-term work contracts for permanent jobs, and allegations that workers signed resignation letters to avoid receiving full severance pay.
"The workers actually wanted to be laid off, not resign. But some signed resignation letters," Junaid said.
The United States also emphasizes workplace safety. According to their records, at least eight workplace accidents occurred in industrial areas where they advocate for workers, three of which resulted in fatalities.
Low social score, does it mean citizens are at risk?
Fitria from KESGI said a low social security score doesn't automatically indicate a violation. However, it can be a signal of social risk.
"A low social score indicates that corporate social management issues are still limited or not yet a top priority," he said.
In the mining context, this condition has the potential to increase the risk of social conflict, employment issues, occupational safety, land conservation, and relations with communities around the mine.
Meanwhile, Civil Society Organizations are looking at this problem further.
Dini Pramita, Head of the Research and Database Division of JATAM (Mining Advocacy Network), said that the more extensive the landscape is cleared for mining, the more living space is sacrificed for residents.
"The seizure of living space does not always mean the seizure of living space," Dini told Prohealth, Wednesday, May 20, 2026. What is lost can include food space, clean water sources, productive land, customary territories, and even space to maintain livelihoods across generations.
According to JATAM, mining expansion also brings cumulative impacts: worsening air quality, air pollution, increased diseases such as acute respiratory infections and dermatitis, flooding, drought, and intimidation of residents who oppose mining.
However, many of the above issues are not taken into serious consideration in ESG assessments.
JATAM assessed that ESG often requires the seizure of living space simply for land settlement purposes. While citizen complaint mechanisms are included in the assessment, they fail to address patterns of structural violence such as intimidation or criminalization.
The multiple impacts on women are also rarely addressed. "Women often bear the brunt of the impact when clean water is scarce, food is scarce, harvests decline, or family members become more ill," Dini said.
According to JATAM, long-term social damage, ranging from the breakdown of social cohesion to the increase in horizontal conflict, is hardly being seriously assessed.
When asked whether ESG is currently effective enough to protect mining-affected communities, the short answer is: “No.”
Ria from The Prakarsa also added that discussions about the energy transition have focused on energy mix targets, green financing, or renewable energy capacity. Meanwhile, the plight of miners, coal transport drivers, or communities surrounding coal-fired power plants often comes up in the background.
Many parties have started to use the term just transition or just transition. However, he said, implementation remains minimal. "There's no clear budget allocation, no specific responsible agency, or measurable targets for affected workers," he said.
As a result, social protection often becomes an add-on, not a priority. "As long as the success of the energy transition is measured by the installed megawatts of renewable energy, rather than the well-being of transitioning communities, social protection will continue to be an add-on," said Ria. She emphasized that while governance can be built through reports and policies, the social aspect demands something more difficult: real change in people's lives.
Company responses to ESG issues
Karina Novianti, Corporate Communications of PT Alamtri Minerals Indonesia, said the company carries out all business activities by prioritizing the principles of poverty, good governance, and compliance with applicable laws and regulations.
He said the company understands that the Environmental, Social, and Governance (ESG) aspect encompasses various dimensions that continue to evolve, including the social aspect, which is an important part of the company's sustainability agenda.
"In line with this, the company is continuously making various efforts to strengthen the social aspects of ESG and improve performance across all other aspects of the ecosystem through various policies and initiatives relevant to the company's operations," said Karina.
As of the publication of this article, the editorial team had attempted to contact PT Huadi to request information and confirmation regarding the issues raised in this report. However, as of publication deadline, the company had not yet responded. The editorial team remains open to the possibility of a right of reply should the company wish to provide further clarification or explanation at a later date.
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This article was first published on prohealth.id