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)