Sat, 04 Jan 2003

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.