Daily basic wage level up by 10%

JAKARTA (JP): Minister of Manpower Abdul Latief said yesterday that the government will increase the regional daily minimum wage level nationwide by ten percent as of April next year.

"We will increase the regional daily minimum wage level nationwide from 97 percent to 107 percent of the workers' minimum physical needs," Latief said in a hearing with Commission VI of the House of Representatives (DPR).

However, he told the commission, which deals with industrial and labor affairs, that the government would gradually increase the minimum wage level by 15 percent or equal to the required minimum needed by the workers.

Members of the commission welcomed the government's plan to increase worker's regional daily minimum wages.

Iskandar Mandji, a Golkar legislator, even demanded an automatic proportional increase in minimum wages for each production sector.

"Every employer must be able to calculate the automatic increase in wages each time the government hikes certain tariffs, such as its usual increases in electricity billing rates," he said.

Latief said the government would object to some multinational companies' move to relocate their factories to Indonesia if their motive was simply cheap labor.

"The government cannot accept any multinational company's policy to keep working wages low while their production costs are in fact also low," he said.

"How can we talk about productivity when the workers are hungry?" he added.

Farid Akhwan, also a legislator of the Golkar faction, agreed with Latief's argument.

"Productivity will automatically follow the workers' level of welfare." he said.

In many regions, including Jakarta and West Java, the minimum wages are now close to meeting the worker's minimum physical needs, which are calculated on the basis of local consumer index prices.

But in a number of regions, the minimum wages are still barely 60 percent of what is minimally needed to survive.

The regional daily minimum wage for the greater Jakarta area was raised in January to Rp 3,800 (US$1.8) from a previous Rp 3,000.

However, it is still below that of Batam, a flourishing industrial designated zone south of Singapore, and Irian Jaya, with the minimum daily wage set at Rp 6,750 and Rp 4,500, respectively. Batam and Irian Jaya rank as the two highest minimum wage levels in the country.

Review

Latief said the government was currently reviewing the minimum wage regulations and strengthening punitive measures against violators to ensure greater compliance.

He said the government had drafted a bill which includes stronger penalties for violators, usually those failing to pay the minimum wage. The bill is expected to be ready for deliberation in April.

Under the present regulation enacted in Law No. 14/1969, a company owner who does not pay his workers the required minimum wage faces a maximum of three months in jail, or a fine of Rp 100,000.

Latief said the government will not hesitate to prosecute company owners who ignored the minimum wage regulations. The regulations allow for exceptions if the companies' finances prevent them from paying the minimum wage levels.

He said companies seeking to be exempted must prove in court that they truly could not pay the minimum wages.

Meanwhile, Director General for Labor Standards and Industrial Relations Suwarto said after the hearing that 16 companies had been fined for failure to pay the minimum wage and to comply with other government labor regulations.

He said another 94 companies were either being prosecuted or investigated for violating the regulations. (imn)