Govt set to slightly increase minimum wages

Ridwan Max Sijabat, The Jakarta Post/Jakarta

Minimum wages for workers in the country are set to improve slightly next year, with the government issuing a ruling requiring employers to add allowances for recreational activities and compulsory savings to wages.

Ministry of Manpower and Transmigration director general for industrial relations Musni Tambusai said the new components were stipulated in Ministerial Decree No. 17/2005.

Musni made the announcement on Thursday after a meeting with labor unions and the Indonesian Employers Association (Apindo).

He said the decree meant minimum wages at the provincial and regional level would be adjusted upward. The calculation of the minimum wage is currently based on 44 components.

The new policy was part of efforts to gradually raise labor standards in the country allow workers' wages to meet what the ministry called the standard human needs (KHL) level.

Musni said the KHL target had not yet been met because of the country's weak economy.

The new decree replaces Ministerial Decree No. 81/1995 and forces employers to pay for workers to visit recreation centers in nearby areas at least twice a year and to put aside at least 2 percent of their minimum wage in savings.

"With the new wage components, workers in Jakarta and outskirts are expected to go to recreation centers such as the Ragunan Zoo, Indonesia in Miniature Park and Ancol Recreation Center at least twice a year and have a little savings in banks," Musni said.

Musni, however, could not say what the size of the minimum wage increase would be next year.

"Besides the wage components, the minimum wages will also depend on productivity and inflation rates," he said, adding that the wage levels differed from one area to another.

Labor unions had no other choice but to accept the new policy, although they had been fighting for a greater hike in the minimum wage level to meet the KHL target, as businesses here were still facing difficulties, he said.

The secretary general of the Confederation of All-Indonesian Workers Union (KSPSI), Syukur Sarto, said labor unions were not satisfied with the new 46 wage components "but we have to accept the decree because of the current economic condition."

Meanwhile, Apindo Chairman Sofjan Wanandi thanked workers for not forcing employers to immediately adopt the KHL target.

"Many employers have had headaches amid the (current) drastic slide of the rupiah against the U.S. dollar. Many companies have suspended their operations because they can no longer buy dollars to pay for imported raw materials," he said. Many employers would likely have to lay off part of their workforce if the crisis was prolonged, he warned.

Sofjan conceded the issue of the KHL was central to a long debate between employers and unions "and both employers and workers have no alternative but to work hand-in-hand to help businesses come out of the crisis. Then the KHL can be fully implemented at the right time."

He suggested minimum wages be set once every two to three years to avoid annual disputes between employers and workers.

Rigid labor regulations, strikes and problems with laying off staff, had made foreign investors reluctant to put their money in Indonesia, he said.