Productivity to low: Minister<\/p>\n
JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo
\nblamed yesterday the non-oil and gas export slowdown in recent
\nyears on the low productivity of Indonesian workers, which had
\nnot risen to match the rapid rise in government-mandated minimum
\nwages.<\/p>\n
Speaking at a hearing of House Commission VI for industry and
\ninvestment, Tunky said the lower growth of non-oil and gas
\nexports was caused by the slow rise of workers' productivity
\ncompared to their annual wage hikes.<\/p>\n
\"Workers' wages in manufacturing, in particular, have
\nincreased much quicker than their productivity,\" he asserted.<\/p>\n
Tunky said that between 1985 and 1995 worker's salaries
\nincreased 170 percent while their productivity only increased 75
\npercent.<\/p>\n
\"In Malaysia and Thailand over that period, workers' salaries
\ngrew by an average of 100 percent and productivity increased 90
\npercent, providing a stable basis for industrial development,\" he
\nsaid.<\/p>\n
He said the annual growth rate of workers' wages in Indonesia
\nbetween 1988 and 1993 was 14.3 percent -- higher than most
\nSoutheast Asian and South Asian countries.<\/p>\n
In that period, Thailand increased its workers' salaries 9.5
\npercent a year, Sri Lanka by 5.4 percent and China by 5.9
\npercent, while India lowered its workers' wages 6.2 percent a
\nyear.<\/p>\n
But Tunky admitted that, despite the rapid rise in wages,
\nworkers' wages in Indonesia were far lower than those in
\nThailand, India and Malaysia.<\/p>\n
Wages in Indonesia, then 43 U.S. cents an hour, were among the
\nlowest in South Asia and Southeast Asia in 1993. Thailand's were
\nUS$1.04 an hour and India's were 56 U.S. cents an hour.<\/p>\n
Tunky said yesterday that productivity was determined by the
\ntechnology applied by a company and the skills mastered by its
\nworkers.<\/p>\n
\"Low productivity is the result of minimum-technology, labor-
\nintensive operations. To increase productivity, a company must
\nmake large investments in technology and human resources
\ntraining,\" Tunky said.<\/p>\n
He said the government's recent move to increase workers'
\nwages should not decrease the competitiveness of products.
\nInstead it should encourage companies to increase their
\nefficiency and optimize production processes.<\/p>\n
Last week, the government mandated an average minimum wage
\nrise of 10.07 percent nationwide.<\/p>\n
Many observers, including legislators at yesterday's hearing,
\nconsidered the hike was insufficient to meet workers' basic daily
\nneeds.<\/p>\n
According to the Ministry of Industry and Trade, the growth of
\nplywood and wood product exports rose from 9.9 percent in 1991 to
\n14.3 percent in 1992 and 31.6 percent in 1993. But the growth of
\nthese exports fell to 5.6 percent in 1994, 3.7 percent in 1995
\nand 2.3 percent in the first six months of last year.<\/p>\n
Meanwhile, textile, textile-related products and footwear
\nexports grew 43.7 percent in 1991 and 45.1 percent in 1992. But
\nthis growth fell to 6.1 percent in 1993 and to minus 6.7 percent
\nin 1994 before rising to growth levels of 6.1 percent in 1995 and
\n4 percent in the first half of 1996.<\/p>\n
Exports of electronic products also grew steadily until
\nreaching 149.3 percent annual growth in 1992 from 110.7 percent
\nin 1991. This also dropped to 43.2 percent in 1993, 53.9 percent
\nin 1994, 23.7 percent in 1995 and 18.1 percent in mid-1996.<\/p>\n
Plywood, wood, textile and electronics industries are
\ncategorized as labor-intensive sectors.<\/p>\n
The ministry said the annual increase in workers' wages in
\ntextile and leather industries, averaging 11.6 percent between
\n1989 and 1992, was higher than in other sectors.<\/p>\n
But the annual productivity growth of this sector was only 6.8
\npercent.<\/p>\n
By comparison, wage rises in the wood product industry
\naveraged 0.2 percent while productivity growth was 2.5 percent.<\/p>\n
In the food and beverage industry, wages rose 8.8 percent a
\nyear while productivity increased 14.9 percent. (pwn)<\/p>\n
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