Invisible costs blamed for low wages

Ridwan Max Sijabat, The Jakarta Post, Jakarta

A labor observer and a human rights activist are calling on the government to fight the high-cost economy, which employers say is preventing them from paying workers fairly and in accordance with the law.

Bomer Pasaribu, a former manpower minister, said most employers could not pay their employees better salaries because they had to pay off government and military officials, political parties, mass organizations and hoodlums.

"Most businesspeople will have a hard time in the next two months not only because they have to pay annual bonuses to their workers and redesign their labor costs in line with the planned increase in minimum wages as of Jan. 1, 2004, but also because they have to allocate more funds for unexpected expenditures," he told The Jakarta Post here on Wednesday.

He was commenting on the contentious increase in the monthly minimum wage in Jakarta and its outskirts to Rp 671,000 (US$79) a month in 2004 from the current Rp 631,000.

Bomer, who chairs the Center for Labor Development Studies (CLDS), quoted a CLDS survey in May which revealed that most companies allocated between 20 percent and 30 percent of their total budgets for labor, a half of which was spent on invisible costs.

Solahuddin Wahid, deputy chairman of the National Commission of Human Rights, said the minimum wage issue was complicated.

He declined to say the minimum wage ran contrary to the human rights law and the 1945 Constitution because it depended much on employers' financial capabilities.

"It is impossible to force employers to comply with the minimum wage regulations if they are unable to do so. If investors close down their companies or relocate to other countries this will also leave many workers unemployed and disrupt the political situation," he said.

He said the right body was throwing its weight behind employers' nationwide antibribe campaign to minimize the high- cost economy.

Hit by the decline in Indonesia's competitiveness in the international market, the Indonesian Employers Association (Apindo) said invisible costs in the economy prevented some employers from paying workers in accordance with the law.

"The invisible costs are another factor, but the amount is no more than the annual bonuses employers pay their workers," Apindo deputy chairman Hariyadi Sukamdani said.

Hariyadi, who is also president of the Sahid Hotel Holding Group, declined to disclose the amount of invisible costs his group had to pay to third parties.

Asked whether employers were hiding behind these invisible costs to avoid paying their workers fair wages, Hariyadi said the media should investigate the issue.

Apindo secretary-general Djimanto said that besides giving bonuses, gifts and frequent bribes, businesspeople were also subject to illegal fees starting from the time they applied for investment licenses all the way through to the export process.

"The high-cost economy has been a chronic disease that has plagued the nation since the New Order era," he said.

He noted that with regional autonomy, investors faced not only central government officials, but also the "new small but powerful kings in the regions" such as governors, regents and other local elites.

Many labor unions have called the new minimum wages unrealistically low and inhumane.

The Confederation of Indonesian Prosperity Labor Union (KSBSI) has threatened to sue Jakarta Governor Sutiyoso in the State Administrative Court for signing the minimum wage regulation in Jakarta.

The confederation said the minimum wage violated Law No. 13/2003, which stipulates the monthly minimum wage must be sufficient to allow workers to "live decently".

"None of the components used to set the minimum wage match the commodity price index," the confederation said.

Bomer agreed that the wage components did not match the current situation in terms of price, quantity and quality.

According to the confederation, a single worker needs to earn Rp 1.3 million a month, not Rp 690,000, to rent a room, purchase about 20 kilograms of rice, four kilograms of meat, four kilograms of eggs, two sets of clothes and other secondary and tertiary needs.

Wage parameters according to government's monthly minimum needs

A. Food and beverages: 1. Rice 12 kilograms Rp 38,400 2. Meat 75 grams Rp 15,000 3. Fish 1.2 kg Rp 9,000 4. Nuts 1.5 kg Rp 3,300 5. Sugar 3 kg Rp 10,500 6. Palm oil 1.5 kg Rp 6,750 7. Vegetables 7.2 kg Rp 13,680 8. Fruits 7.5 kg Rp 31,875 9. Snack 6 kg Rp 2,350 10. Coffee 0.5 kg - 11. Tea 0.3 kg -

B. Housing:

1. Simple rental room Rp 50,000 2. Bed Rp 10,000 3. Pillow Rp 5,000 4. Bed cover Rp 11,000 5. Furniture Rp 13,889 6. Plates Rp 500 7. Glasses Rp 250 8. Kettle Rp 1,750 9. Woks Rp 750 10. Pans Rp 2,500 11. Kerosene-fueled brazier Rp 2,500 12. Kerosene 10 liters - 13. Mat Rp 1,250 14. Electricity -- 15. Light bulbs 3 Rp 9,000 16. Washing soap 1.5 kg ---

C. Clothes

1. Trousers/dress 3 pieces Rp 7,500 2. Shirts 3 pieces Rp 7,500 3. T-shirts 3 pieces Rp 2,000 4. Sarong 1 piece Rp 2,500 5. Underpants 4 pieces Rp 1,333 6. Bras 2 pieces Rp 2,000 7. Shoes 2 pairs Rp 5,000 8. Sandals 2 pairs Rp 1,000 9. Towels 2 pieces Rp 1,666

D. Other tertiary needs

1. Toothpaste 2 units -- 2. Bath soap 2 packs -- 3. Toothbrush 2 units 4. Hair cuts one -- 5. Newspaper one copy a month 6. Entertainment once a month to go

to non-airconditioned

theater --