The minimum wage riddle<\/p>\n
How do you eke out an existence on a monthly salary of Rp
\n231,000 (US$31)? It is a riddle that can be answered in thousands
\nof different ways. Many workers in Jakarta who are paid the
\ncurrent minimum wage are bound to have different tales to tell of
\nhow they make ends meet. The minimum wage in the capital barely
\ncovers the minimum required for a single person to subsist.
\nPeople on a minimum wage, many of them with dependents to
\nsupport, have devised their own innovative ways of scrimping and
\nsaving to survive from day to day.<\/p>\n
The 24 percent increase announced by the government on Monday
\ntakes the minimum wage in Jakarta to Rp 286,000, but that still
\ncovers only 81 percent of the monthly cost of living for a single
\nperson. People in most other regions are not doing any better,
\neither. A worker receiving the minimum wage in West Nusa Tenggara
\nis the worst off of all because his new income of Rp 180,000 will
\nstill cover only 70 percent of the estimated subsistence level.
\nOnly in onshore Riau and parts of East Java do minimum wages
\ncover the subsistence level.<\/p>\n
The government should be commended for increasing regional
\nminimum wages at a time when the economy is still in the doldrums
\nand when most local and foreign investors are holding back
\nbecause of continuing political uncertainty. According to the
\nannouncement on Monday, minimum wages, effective April 1, will
\nincrease by between 15 percent and 55 percent. The increases
\nfollowed negotiations between representatives of workers,
\nemployers and administrations in each province. The central
\ngovernment, for a change, played a minimal role in setting the
\nminimum wages, essentially limited to announcing the deals.<\/p>\n
The raises are still significant if we consider that inflation
\nin 1999 was only 2 percent, and they will certainly make up for
\nlost ground. Last year, minimum wages rose an average of 16
\npercent, lagging behind the 78 percent runaway inflation of 1998.
\nSince minimum wages in most cases do not cover the subsistence
\nlevel, there is a powerful argument for all parties concerned to
\nraise them even further. But there is a limit on how fast
\nemployers can increase wages given the current state of the
\neconomy. Since the latest increases resulted from negotiations
\nbetween unions and employers, we can only surmise that this is as
\nfar as most employers can go for now.<\/p>\n
The most important thing at this stage is that the government
\nhas shown the political will. The Ministry of Manpower, which
\nannounced the hikes, has promised to strive to bring the minimum
\nwages to a level that will afford workers a decent life. That
\nmeans ensuring that they are at least on par with the subsistence
\nlevel.<\/p>\n
In today's era of democracy, workers unions are in a far
\nbetter bargaining position to fight to improve the welfare of
\ntheir members. With workers' constitutional right to organize
\nfully respected, the number of unions has mushroomed, all of them
\nclaiming to be struggling in the workers' best interests. While
\nwe do not advocate more militant trade unions, the country's
\nlabor organizations have been far too submissive in the past in
\ndealing with employers. With greater freedom and with a more
\nneutral government, these unions should make it their priority to
\nfight for more acceptable minimum wages.<\/p>\n
The government can help in contributing to the search for the
\nanswer to the riddle of minimum wages. The cost of doing business
\nin Indonesia is still bogged down in too many levies, legitimate
\nand otherwise, imposed by government agencies at almost every
\nlevel. Past administrations, under presidents Soeharto and B.J.
\nHabibie, recognized this problem but seemed helpless in breaking
\nthrough the powerful bureaucracy, which has an interest in
\nkeeping these levies. Now President Abdurrahman Wahid, given his
\npopular support, should confront the bureaucracy on this issue
\nand for once prevail. For too long, our workers have been
\ndeprived of their fair share only because some bureaucrats have
\ndecided to enrich themselves by using their power. Eliminating
\nthe levies will mean that huge sums of money can be better spent
\non improving the workers' lot.<\/p>",
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"sponsor": "Okusi Associates",
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