'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.