Government fails to enforce new minimum wage ruling

Ridwan Max Sijabat, The Jakarta Post/Jakarta

The government has acknowledged that labor oversupply and the prolonged economic crisis have prevented it from enacting the new ruling on minimum wages. According to Law No. 13/2003 on manpower, minimum wages should be calculated according to basic humane physical needs (KHL), rather than the current consideration of basic needs (KHM).

Ministry of Manpower and Transmigration spokesman Hotma Panjaitan, said here on Tuesday that 2005 was not the right time for workers to enjoy a wage hike. He said that while the new labor law came into effect early this year, the enactment of the ruling on provincial minimum wages -- based on basic humane physical needs -- had been suspended until January 2006.

"Yet, the government calls on all employers to accept the minimum wages, which are based on basic needs, because, so far, only 10 of 30 provinces have adopted wages based on humane physical needs.This condition is the result of labor oversupply, the prolonged economic crisis and Indonesia's unhealthy business climate," he said.

Hotma said the manpower minister had issued a decree to suspend the enactment of the new ruling in response to employers' complaints about the unfavorable investment climate here.

He said most complaints stemmed from the high-cost economy, lack of legal certainty, damaged infrastructure and security disturbances.

"We cannot ask foreign investors to invest in Indonesia to generate job opportunities and accommodate the rapid growth of the workforce, which has reached more than 100 million," he said.

The unemployment rate, including underemployment, has surpassed 43 million.

Minimum wage levels based on humane physical needs are far higher as the category calls for 50 wage components, while wages based on basic needs alone call for only 43 components. The minimum wage differs from one province to another due to differing price indexes and average per capita income.

Hotma said that the minimum wage was intended to act as a social safety net for single workers, regardless of their educational background, qualifications or work experience.

"Employers should pay their workers the minimum wage at the least -- paying them more would be better," he said.

So far, the government has raised wages in 14 provinces by an average of 11.25 percent. The remaining 16 provinces, including North Sumatra, East Java and Papua, are expected to set their minimum wages in the middle of this month.

Minimum wages in 14 provinces ===========================================================================

Minimum wages No Province 2005 2004 hike percentage =================================================================

1. Aceh Rp 620,000 Rp 550,000 12.73% 2. West Sumatra 540,000 480,000 12.50% 3. Riau 551,500 476,875 15.65% 4. Bangka-Belitung 560,000 447,923 25% 5. Bengkulu 430,000 363,000 18% 6. West Java 408,260 366,500 11.39% 7. Jakarta & outskirts 711,843 671,550 6% 8. Yogyakarta 400,000 365,000 9.59% 9. Bali 447,500 425,000 5.29% 10. West Kalimantan 445,200 420,000 6% 11. South Kalimantan 536,300 482,250 11.22% 12. East Kalimantan 600,000 572,652 4.78% 13. Southeast Sulawesi 498,600 450,000 6% 14. South Sulawesi 510,000 455,000 12.09% ============================================================= Source: Ministry of Manpower and Transmigration