A goodwill gesture
A goodwill gesture
The government's decision to raise regional minimum wages by
an average of 16 percent could easily be taken as a gross insult
considering the country suffered inflation of 77 percent in 1998.
For many workers, real income has lagged so far behind runaway
inflation in the past two years that even a 100 percent increase
would not make up for lost ground.
But considering current economic conditions, including the
high unemployment rate, the wage increase is still significant.
Those of us who have jobs and are earning fixed incomes should
count our blessings. Millions of others have been laid off since
the crisis hit, and many more will lose their jobs in the course
of the next year or so until we see a turnaround in the economy.
The entire nation has been impoverished by the crisis.
Admittedly, the poorest among us, including those on minimum
wages, have to be bear the brunt. Officials at the Ministry of
Manpower disclosed the minimum wage covers only about 70 percent
of the minimum physical requirements for an average single
person, down from 75.8 percent in October. How people earning a
minimum wage survive defies the imagination of many of the more
fortunate.
The government's decision to increase the minimum wage, albeit
by a token amount, is a goodwill gesture. It is a display of its
commitment to improving the conditions of low-paid workers, even
in times of crisis. This time last year, as the crisis began to
take its toll, the government of then president Soeharto decided
not to grant any increase. It was not until August, when
President B.J. Habibie was already in charge, that an across-the-
board increase was effected.
The latest gesture will only be accepted in good faith if
there are follow-up actions. As we wait for the economic rebound
that will allow larger hikes in minimum wages, the government
must turn its attention to improving labor rules and regulations
not only to improve worker protection, but also to better
delineate the respective rights and duties of workers and
employers.
Recent labor disputes indicate that laying off workers in
Indonesia is not only a protracted affair, but at times even
destructive. Many companies do not have collective labor
agreements with their workers or, as events have shown, those
which do exist are often seriously flawed. Management needs the
flexibility to hire and fire workers while workers need the
security of jobs, or at least the knowledge they will receive
fitting compensation if laid off. The concerns should be included
in any collective labor agreement.
While there are the many companies which do not afford their
workers the luxury of the agreement, those that do often slant it
so markedly to their advantage that workers feel no obligation to
the terms when the crunch comes. A collective labor agreement
should be negotiated between two equal partners, wherein lies the
argument for a labor union that is strong and independent, not
repressed and controlled as in the past.
The crisis has also exposed the fallacy of the cheap labor
policy. Since wages make up a relatively small percentage of
total costs, employers often manage to weather the recession
without having to retrench their workforce. Layoffs are a last
resort not only because of likely strong resistance from workers,
but also because the costs of keeping them on are relatively low.
The cheap labor policy in Indonesia comes with its own price tag
in inflexibility in hiring and firing workers. At a time of
crisis, rigidity is a liability that undermines any competitive
advantage Indonesia wields abroad.
As Indonesia becomes part of a global economy, it is high time
the country -- the government, employers and labor unions -- take
a completely new approach to our labor policies. There is plenty
of work to be done on the labor front. The government at least
has shown it has the goodwill.