Abdul Latief refutes World Bank report

Abdul Latief refutes World Bank report

YOGYAKARTA (JP): Minister of Manpower Abdul Latief said the
Indonesian government will review its daily minimum wage
standards annually to maintain workers' well-being and
productivity.

"The triple hike in the daily minimum wage level in the last
decade has not hurt the flow of foreign investment into
Indonesia," he said in an interview with The Jakarta Post on
Monday.

"I have checked on it (with the office of investment
coordinating board) and found that foreign investment in
Indonesia has not dropped in the last decade."

Latief was responding to a recent World Bank warning that the
daily minimum wage levels set by the government were inadequate.

In its 1996 report, the bank warned the 5.5 percent annual
hike between 1970 and 1991 could erode Indonesia's
competitiveness, lower employment growth, worsen poverty and
trigger labor unrest.

The report also stated that the minimum wage regulations
issued in 1989, made minimum wages on average triple in nominal
terms and double in real terms between 1989 and 1995.

"The government is committed to annually reviewing the daily
minimum wage level to improve the welfare of around 40 million
paid workers in the country as well as to enhance the
competitiveness of Indonesian products on the global market,"
Latief said.

Latief was in Yogyakarta for two days to forge cooperation
between his ministry and local small and mid-sized businesses to
encourage employment in the province.

He said the government could no longer use its cheap-labor
policy to woo foreign investors because, besides immiserating
workers, it would make workers unproductive and Indonesian
products less competitive.

"That is why the government has pushed for the increase in
minimum wages in the last decade -- to boost the economic growth
and to enable workers to improve productivity," he said.

He said next year the government will raise the daily calorie
intake a single worker needs from 2,600 to 3,000. This will
increase wages by at least 8.6 percent.

He said the increase is based on a recent study by the
Ministry of Health. The ministry found a single worker needs at
least 3,000 calories a day.

Latief, who is also the founder of the ALatief Corporation,
claimed increased minimum wages have improved workers' purchasing
power and helped strengthened small and mid-sized businesses,
especially those in the informal economy. (rms)