Confusion over wages

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