'High-cost economy' curbs better pays

'High-cost economy' curbs better pays

Ridwan Max Sijabat, The Jakarta Post/Jakarta

Employers, labor unions and the government have agreed to
eliminate the high-cost economy in an endeavor to help repair the
investment climate and improve workers' welfare.

Employers have long been complaining of the double taxation
system, rampant extortion by third parties, corrupt
administrations and damaged infrastructure in most regions that
have discouraged foreign investors from investing in the country
and most employers from paying their workers higher than the
minimum wage.

The Federation of All-Indonesian Workers Union (KSPSI) and the
Federation of Indonesian Prosperity Labor Union (KSBSI) said on
Thursday that the two major trade unions would be behind the
government in fighting against the invisible costs which have
been paid by employers at the expense of their workers.

Asked to comment on the tripartite agreement to eliminate the
high-cost economy at the Borobudur Hotel on Wednesday, secretary-
general of KSPSI Syukur Sarto said KSPSI had urged the government
several times to revise the tax system and award a tax holiday to
companies paying their workers decent wages and carrying out
training programs to improve their skills and productivity.

"The tax system must be revised and companies committed to
improving workers' skills, productivity and livelihood must be
given special incentives. This will help fix the business climate
and lure more foreign investors to invest in Indonesia," he said,
adding that most investors have been overburdened by the double
tax system under the regional autonomy.

Director General for Industrial Relations at the Ministry of
Manpower and Transmigration Muzni Tambusai said the government
was revising thousands of contentious regulations issued by local
administrations in line with the implementation of regional
autonomy.

"The government has already reviewed the regional autonomy and
fiscal balance laws and lifted a number of contentious bylaws on
double taxes and the complicated process of investment permits.
Besides, the government has just held an international summit to
seek funds for the rehabilitation of damaged infrastructure."

Djimanto, secretary-general of the Indonesian Employers'
Association (Apindo), said the majority of employers were
optimistic of an immediate economic recovery in view of the
government's commitment to repair the investment climate and
eliminate the high-cost economy.

"It takes time and it cannot be completed within 100 days. The
most important thing is that the government has a strong
commitment and has taken a series of measures to show its strong
commitment," he said.

Rekson Silaban, chairman of KSBSI, said employers and labor
unions were also of the same opinion that the remuneration
mechanism should be left to the market with the government
setting the minimum wage level.

"With an improved investment climate and labor conditions,
employers are expected to be able to pay their workers higher
than the government-set minimum wage as has been practiced in
developed countries," he said, citing that Malaysia and Singapore
have since long adopted such a remuneration system.

When asked about industrial relations in Indonesia, Rekson
said Indonesia should establish an industrial relations model
which was operational and executable.

"We should learn from numerous models in Europe, the United
States or Japan, which are all operational and morally binding,"
he said, adding that the current concept implemented in Indonesia
was not operational because it was too general in the nature.

He said European Union has its OECD Guidelines on operational
industrial relations and pacts between workers and employers and
any side violating the industrial relations' norms would
certainly receive social sanctions from the employers and workers
communities.

Citing as another example, he said that employers and trade
unions in Japan have reached an agreement that workers have a
certain day in a year to air their aspirations in which their
employers have to give a response. Outside that certain day,
workers are not allowed to stay out of their workplace and those
violating this agreement will be excluded from trade unions.