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.