RI's labor cost still competitive: Expert<\/p>\n
A'an Suryana, The Jakarta Post, Jakarta<\/p>\n
Illegal fees payable to governmental officials, not labor
\ncosts, are the main factors troubling existing investors and
\ndiscouraging new investors from entering the country, according
\nto one local labor expert.<\/p>\n
\"It is not true that the cost of labor is the main factor
\ncausing foreign investors to move out of Indonesia.<\/p>\n
\"Indonesia's labor costs remain competitive compared to other
\ncountries,\" said Fauzi Abdullah, a labor expert with the non-
\ngovernmental organization, Sedane Labor Information Institute,
\ntold The Jakarta Post on Monday.<\/p>\n
Fauzi was commenting on the recent statement made by Minister
\nof Industry and Trade Rini M. Soewandi that labor problems,
\nincluding the high cost of labor, had prompted businessmen to
\nrelocate their factories to other countries.<\/p>\n
Rini, speaking to reporters in Sukohardjo, Central Java,
\nmentioned that the illegal fees payable by industries to
\ngovernmental officials for various licenses or clearance at
\nports, which is locally called pungli, was another problem the
\nbusiness community and government must address to create a
\ncompetitive business environment here.<\/p>\n
According to Fauzi, Indonesia's labor cost was about 15
\npercent of total production costs.<\/p>\n
The figure was higher than Vietnam and China, but slightly
\nlower than Malaysia and Thailand, he said.<\/p>\n
\"Indonesia's labor costs are much lower, if compared to those
\nin Western countries, where labor costs amount to between 30
\npercent and 35 percent of total production costs,\" said Fauzi.<\/p>\n
According to Fauzi, instead of blaming workers for the
\nrelocation of factories by foreign investors, the business
\ncommunity must seek a breakthrough to resolve lingering
\ncorruption.<\/p>\n
\"These illegal costs burden businessmen and should be placed
\nas a priority for the government to address,\" he said.<\/p>\n
A failure to address the problem would only aggravate workers
\nbecause businessmen usually reduce workers' salaries to
\ncompensate for losses caused by the corrupt practices of
\ngovernment officials.<\/p>\n
Anton Supit, the chairman of the Indonesian Footwear
\nAssociation, agreed that pungli was a problem for the country's
\nindustries but said the cost was quite small compared to the cost
\nof labor in the industries' cost structure.<\/p>\n
\"However, despite being small, any reduction of this cost
\nwould be valuable for us in the current economic slowdown,\" said
\nAnton.<\/p>\n
But, Anton maintained investors consider the cost of labor,
\nnot the illegal payments, to be the main problem for their
\nbusinesses.<\/p>\n
Indonesia's labor costs are too high and should be reduced in
\norder for businesses to remain competitive, he said.<\/p>\n
\"In the garment, shoe and toy factories for example, the cost
\nof labor can be as high as between 20 percent and 24 percent of
\nthe product's selling price, while a fair labor cost in these
\nindustries is 15 percent,\" he said.<\/p>\n
The same situation also applies for electronic and other
\nsimilar sectors. \"The cost of labor is 50 percent of the total
\nmanufacturing cost, this figure is too high,\" he said.<\/p>\n
Many investors also complain that labor disputes often
\ndisrupted product delivery to customers.<\/p>\n
Due to the high cost of labor and labor disputes, many
\ninvestors have relocated their factories to other countries,
\nwhere labor costs are lower and workers less volatile, such as
\nChina and Vietnam.<\/p>\n
In order to resolve the contentious labor issue, compromise
\nmust be sought among businessmen and their employees, resulting
\ninto a win-win solution settlement, said Anton.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ris-labor-cost-still-competitive-expert-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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