Several provinces have announced a significant rise in workers’ minimum wage, but the amount of the increase is facing opposition from certain business groups.
Workers in Jakarta will get a 10 percent increase in the minimum wage, from the current Rp 972,604 (US$89.22) to Rp 1,069,865 next year.
Jakarta Governor Fauzi Bowo said Friday the raise had been agreed to by wage councils, labor unions and business associations.
“We understand that a raise in the minimum wage is necessary, but we also need to maintain the sustainability of the employment provided by businesses. The raise is a compromise,” Fauzi said.
He added the global financial crisis had caused several businesses to cut production or even close down due to declining export orders.
“We hope the new minimum wage will prevent layoffs,” he said.
The Jakarta administration has gradually increased the provincial minimum wage, from Rp 711,843 in 2005 to Rp 819,100 in 2006, Rp 900,560 in 2007 and Rp 972,604 this year.
The West Java administration will raise its minimum wage for 2009 by 10.56 percent, from Rp 568,193 to Rp 628,191.
West Java Governor Ahmad Heryawan said incentives would be offered to businesses affected by the global downturn, through the search for new export and domestic markets.
Some 700,000 West Java residents are employed in 248 textile factories, with 500 to 35,000 workers at each factory.
While provinces in Java raised their minimum wages by about 10 percent, workers in Riau are struggling to top the 6.5 percent raise - in line with national growth - that the manpower, home affairs, and trade and industry ministries have allowed businesses to give.
The minimum wage in Riau is Rp 800,000 this year.
There has been mixed response from industry to the wage hike.
Sofian Pane of the Jakarta Chamber of Commerce and Industry said that during a discussion held two weeks ago, businessmen had proposed an increase of 6 percent, or in line with Jakarta’s growth rate.
“However, we support the final figure of 10 percent. We will ask our colleagues to accept it too,” he said.
Ade Sudrajat, chairman of the Indonesian Textile Association, said the wage hike failed to address the global economic slowdown.
“We will intervene at municipal and regency level to implement a lower wage than that decided on,” he said.
Yuli Tri Suwarni and Rizal Harahap contribute to this article from Bandung and Pekanbaru.
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