Hundreds of thousands of laborers from more than 700 companies in 80 industrial estates also took to the streets to demonstrate, national police spokesman Col. Agus Rianto said.
About 200,000 workers marched in the industrial city of Bekasi, just outside Jakarta, while waving flags and chanting "Workers unite! We can't be defeated!"
The workers want an increase in the minimum wage, health insurance and social security for all employees and a revision of government policies that allow companies to hire temporary workers without benefits, said Yoris Raweyai, chairman of the Confederation of Indonesian Workers' Union.
"We warn the government that we can do worse to the country's economy if they continue ignoring our three main demands," said Said Iqbal, a protest organizer from the Indonesian Workers' Assembly.
Indonesia's Constitutional Court ruled in January that hiring contract laborers is unconstitutional and violates workers' rights.
The government is still drafting a revision of the labor law following the ruling, which may be finished by the end of the year, said Suhartono, spokesman for the Manpower and Transmigration Ministry, who like many Indonesians uses only one name.
He said he believes the number of strikers was lower than union estimates, but did not provide a figure.
President Susilo Bambang Yudhoyono called the strike unfortunate because it could discourage foreign investment, his spokesman Julian Pasha said.
Factory workers in Indonesia earn an average basic salary of just over $120 a month. The economy grew 6.5 percent last year, the fastest pace since the 1997-98 Asian financial crisis, and the cost of living has been increasing, making it harder for workers to pay for food and basic necessities.
Protests are common in Indonesia and are generally peaceful.