Confusion over wages

Efforts made by the government to raise workers' wages have almost always involved debates, resistance and chaos because on the one hand, company owners wish to minimize production costs while on the other workers hope to improve the lives of themselves and their families, if not just to maintain them at the same levels.

This age-old problem cropped up again late December when the Indonesian Association of Company Owners (Apindo) reaffirmed its rejection of the new minimum wage rate for the capital city of Jakarta, which should have come into effect on Jan. 1, 2002. The governor has raised the rate by 38.7 percent to Rp 591,266 but Apindo seems to have gained the support of the Office of the State Minister of Administrative Reform which postponed the enforcement of the new rate.

Although the government allows companies that cannot afford the new minimum wage rate to file their objections, it seems bent on seeing the new decision complied with. Minister of Manpower Jacob Nuwa Wea, also general chairman of the Federation of the All-Indonesia Workers' Unions, has strongly warned Apindo members to comply with the new minimum wage rate. For the government there is no bargain about it.

It is yet to be seen which party will emerge "triumphant". There is no guarantee, either, that this confusion will not recur in future. What is to be borne in mind is that if you rely on cheap labor for your competitive edge, you will always keep the workers' wages low. Increased spending on manpower will frequently pose a problem and weaken the competitive edge in capturing the export markets in advanced countries.

For Indonesia's decision makers, this difficulty is a warning that it is urgent that serious efforts be made to do away with a high-cost economy and shift to the domestic market.

-- Bisnis Indonesia, Jakarta