Minimum wages should be based on inflation: Hipmi<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Regional minimum wages should be adjusted accordingly to the
\ninflation rate, a business association says, suggesting a maximum
\nhike of only 15 percent to avoid further costs to businesses,
\nwhich are also facing rising inflation and interest rates.<\/p>\n
Regional administrations should also discuss any plans of a
\nwage hike with the local business community, as it is businesses
\nwho fully understand local economic conditions, the Association
\nof Young Indonesian Businessmen (HIPMI) said on Friday.<\/p>\n
"Our suggestion is that any wage hike should be inflation-
\nadjusted. If the inflation rate is now at 15 percent, then the
\nwage hike should be somewhere within that range, between 10
\npercent and 15 percent," HIPMI chairman Sandiaga S. Uno said.<\/p>\n
"We would also prefer it if any wage hike plans were first
\ndiscussed with us, as we have found some administrations planning
\nto raise their minimum wage so high that it will surely cause a
\nsudden increase in our costs of doing business."<\/p>\n
Sandiaga said that several HIPMI members, especially those in
\nthe manufacturing sector, were already reporting an increase in
\ntheir production costs of between 15 percent and 20 percent due
\nto the recent fuel price hike and the wage hikes already
\nimplemented in each company.<\/p>\n
Inflation has from January to October accumulated to 15.65
\npercent, after the government raised fuel prices in March and
\nOctober. On a year-on-year basis, inflation in October reached
\n17.89 percent.<\/p>\n
The Jakarta administration has decided to raise the minimum
\nwage for workers by 15 percent to Rp 819,100 (US$82), effective
\nnext year, while other administrations are also in the process of
\nadjusting their minimum wages.<\/p>\n
Workers in several regencies have, however, been asking their
\nadministrations to raise the minimum wage by up to 30 percent,
\nwith some even asking them to double wages.<\/p>\n
Sandiaga warned that if administrations continued to set wage
\nhikes independently beyond the local business community's
\ncapacity, it was possible that businesses would leave the regions
\nwith high minimum wages and restrictive regulations.<\/p>\n
"Several HIPMI members are already sharing information on
\nwhich regions are more profitable to relocate their production
\nbase. So this (setting high wages rises) would be a disadvantage
\nfor the regions themselves," he said.<\/p>\n
HIPMI is therefore urging the local administrations to set a
\nreasonable wage hike, and the central government to continue its
\nefforts in reducing the country's high cost economy, including
\nthrough eradicating red-tape and illegal fees, and providing
\neasier financing access to small-and medium-seized enterprises.<\/p>\n
Sandiaga said, however, that businesses would be unlikely to
\nlay off any workers even if the wage hike was considered too
\nhigh, as it would be even more costlier.<\/p>\n
"We will probably cut our profit margin in the meantime to get
\nthrough the current unfavorable situation, with layoffs as a last
\nresort," he said. "This is because training new workers is
\ncostly, not to mention providing compensation for workers who are
\nlaid off."<\/p>\n
HIPMI groups together some 25,000 young entrepreneurs across
\nthe country.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/minimum-wages-should-be-based-on-inflation-hipmi-1447893297",
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"sponsor": "Okusi Associates",
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