Employers say no to further wage hike

Employers say no to further wage hike

A'an Suryana, The Jakarta Post, Jakarta

Employers remain committed to implementing a 7 percent increase
in the minimum labor wage despite a simultaneous utility price
hike, said an industry leader.

However, employers would not be able to bear another round of
wage increases amid soaring production costs, said Sofyan
Wanandi, chairman of the National Economic Recovery Committee
(KPEN), an influential grouping of employers.

"Worker wages have been raised by 100 percent during the past
three years. We are unable to shoulder more of a burden; enough
is enough," Sofyan said on Friday.

The government raised fuel prices, and electricity and
telephone rates earlier this week as part of efforts to reduce
expensive subsidies and help prevent state utilities from going
bankrupt.

But the price increases will boost living expenses, tempting
workers to demand another round of wage hikes on top of the 7
percent wage increase.

This latest increase was agreed in December last year, when
employers and workers' representatives sat down together and
agreed that the minimum labor wage in Jakarta be raised by 7
percent, from Rp 591,000 (about US$66) per month to Rp 631,000.

The agreement took effect on Jan. 1, but it has yet to take
into account increases in utility charges, which could certainly
eat into workers' purchasing power.

Responding to possible labor demands for a wage hike, Sofyan
said that the increased utility charges should provide the right
momentum for workers and employers to unite, standing together to
object to government price hike policy.

Sofyan said the increased utility charges were a blow to local
businesses as it would diminish their ability to compete with
overseas products.

The Central Bureau of Statistics (BPS) reported on Thursday
that the country's November exports had dropped by 23 percent, to
$4.1 billion from the level in October. The bureau did not
provide an explanation for the drop, but some have said that the
country's manufacturers are losing competitiveness abroad.

Sofyan said that the utility price hike policy would also
stifle domestic demand as people's purchasing power diminished.

"We are really in a difficult situation," he said.

Separately, service industry players conceded that they would
also be forced to shoulder a greater burden from the utility
rates hike.

"The government is being insensitive. As the tourism industry
has not recovered yet, we've been hit hard by the utility rates
hike," said Yanti Sukamdani, chairwoman of the Indonesian Hotel
and Restaurant Association (PHRI).

According to Yanti, hoteliers reckoned that their days would
be numbered, unless the government stepped in to help them.

"The 10 percent hotel and restaurant (value-added) tax should
be cut to 5 percent," she said.

Internet services have also been hit hard by the utility rates
hike. "Dial-up internet services will bear the burden of the
telephone rates hike," said Heru Nugroho, chairman of the
Indonesian Internet Service Providers Association (APJII).

Currently, there are 2,000 dial-up internet kiosks in
Indonesia.