Govt prepares regulations on wages

Ridwan Max Sijabat, The Jakarta Post, Jakarta

The government will soon issue two regulations on remuneration for the formal sector and on industrial relations in the informal sector, a manpower official said on Tuesday.

Muzni Tambusai, the director-general for industrial relations at the Ministry of Manpower and Transmigration, said one government regulation would introduce three remuneration criteria, while the other would regulate a social security scheme and provide for simple industrial relations in the informal sector.

The remuneration schemes in the formal sector would consist of a minimum wage system, bipartite negotiations and individual professional negotiations.

"The minimum wage system will remain a safety net to prevent workers from being underpaid," he said after the opening ceremony of a national conference on productivity in Jakarta.

Muzni said he could understand why labor unions recently demanded that the government phase out the minimum wage system and replace it with a wider scheme that covered informal workers.

"But the problem is not there. The problem is that the labor market is oversupplied and most employers prefer the minimum wage system although they are financially able to pay more."

Labor unions recently urged the government to abandon the regional minimum wage scheme because it was applicable only for workers employed in the formal sector.

Muzni said the bipartite negotiations would require workers and employers to agree on remuneration systems at the company level.

"Of the most importance is that management must be transparent about its company's financial condition and union representatives must have skills in bargaining techniques. If managements are committed to building industrial harmony, they should treat their workers as partners and be transparent about their companies' performance," he said.

Muzni said industrial relations had frequently broken down because of a lack of transparency.

The third method, the direct professional negotiations between workers and the management, he said, allowed "... professionals to demand their own salaries in accordance with their skills and working experience."

In the informal sector, Muzni said the government would introduce simple industrial relations and social security programs for workers to enforce the Law 3/1992 on social security and Law No. 13/2003 on labor.

"We will set daily working hours, a simple remuneration system, transportation and meal allowances, and social security programs," he said.

The government has not yet regulated industrial relations in the informal sector, which employs 70 percent of the nation's labor force, or more than 60 million people.

Muzni said the government had asked state insurance firm PT Jamsostek to start introducing social security programs among workers in the informal sector.

"Thousands of housemaids in Yogyakarta and East Java and pedicab drivers in Batam, Riau, have participated in the health and occupational accident insurance programs," he said.