600,000 workers to lose jobs<\/p>\n
Tantri Yuliandini, The Jakarta Post, Jakarta<\/p>\n
Some 600,000 workers in Greater Jakarta are likely to lose their
\njobs next year, following the implementation of new provincial
\nminimum wage, the Employers' Association of Indonesia (Apindo)
\nsaid on Tuesday.<\/p>\n
Apindo secretary-general Djimanto said that the October fuel
\nprice hike followed by the minimum wage hike to be implemented in
\n2006 will put more pressure on the already ailing manufacturing
\nindustry.<\/p>\n
\"The previous fuel price hike in April cost about 200,000 jobs
\nin Greater Jakarta between April and September, this time the
\nimpact will be much worse,\" he told The Jakarta Post at his
\noffice in Kuningan, South Jakarta.<\/p>\n
There was no available data on unemployment figures in Greater
\nJakarta.<\/p>\n
He said that although the direct impact of the fuel price hike
\non production costs was only about 5 percent, indirectly the hike
\nalso meant other increases such as workers' transportation and
\nmeal allowances.<\/p>\n
The increase in the minimum wage, too, would not be much of a
\nproblem for larger manufacturing firms if it was not followed by
\na demand for an increase from non-minimum wage workers, Djimanto
\nsaid.<\/p>\n
\"Almost all of my workers have more than one year's work
\nexperience, so are not on the minimum wage. What is usually the
\ncase, when the minimum wage increases, all other workers also
\nexpect a raise,\" the member of footwear company PT Eltri Indo
\nFootwear's board of commissioner explained.<\/p>\n
The minimum wage is given only to workers with less than one
\nyear's work experience, who are unmarried and hold the lowest
\nposition in the company.<\/p>\n
The monthly minimum wage in 2006 for Jakarta was increased by
\n15 percent to Rp 819,100 (about US$81), while for West Java it
\nwas increased by 9.65 percent to Rp 447,654.<\/p>\n
Companies affected by the minimum wage increase in Jakarta
\ninclude hotels, retail outlets, restaurants and offices, while in
\nWest Java they include labor intensive manufacturing companies.<\/p>\n
Labor costs constitute about 28 percent of total production
\ncosts in a manufacturing firm, Djimanto said, adding that raw
\nmaterials -- and utilities such as electricity and gas --
\ncontribute about 60 percent and overhead costs about 10 percent.<\/p>\n
\"The remaining 2 percent is the profit margin, which will of
\ncourse disappear if wages rise following the minimum wage
\nincrease,\" he said, adding that should wages increase the prices
\nof goods may also increase by at least 20 percent.<\/p>\n
On the other hand, the competitiveness of the country's
\nmanufacturing industry has long been eaten away by high economic
\ncosts represented by difficulties in access to raw materials,
\nhigh bank interest rates, high labor costs, bureaucratic costs,
\nsecurity costs and transportation, he said.<\/p>\n
\"These costs make our products 30 percent more expensive than
\nproducts of countries such as China, Vietnam, the Philippines,
\nand Malaysia,\" Djimanto explained.<\/p>\n
To ensure that companies remain in business, Apindo suggested
\nits members approach their workers and workers' unions for a
\ndelay in the salary increase. General increases in salaries,
\nhowever, would still be given.<\/p>\n
\"The government, too, should help employers stay afloat by
\nissuing more business-friendly regulations,\" he added.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/600000-workers-to-lose-jobs-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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