Jakarta minimum wage to increase by 7%

Jakarta minimum wage to increase by 7%

Damar Harsanto, The Jakarta Post, Jakarta

A tripartite wage committee consisting of the city
administration, employers and worker unions agreed on Monday to
increase Jakarta's provincial minimum wage (UMP) by almost seven
percent beginning in January, a senior businessman said on
Tuesday.

"We eventually reached an agreement to hike the Jakarta
provincial minimum wage by almost 7 percent from about Rp 591,000
(a month) to about Rp 631,000 next year," said Sofjan Wanandi,
who is a member of the committee.

Sofjan, also the chairman of the National Economic Recovery
Committee (KPEN), told The Jakarta Post the agreement was "a
compromise between employers and workers during the apparent
economic hardships".

Previously standardized regional minimum wages, or UMR (Upah
Minimum Regional), were determined solely by the Ministry of
Manpower.

But with the implementation of regional autonomy last year,
the central government lost its power to determine regional
minimum wages, which are now set by provincial tripartite wage
committees and then approved by the respective governors.

The debate over an increase in the Jakarta minimum wage
became heated after employers grouped in the Association of
Indonesian Employers (Apindo) refused to agree to any wage
increase for 2003, citing a sluggish business climate worsened by
capital flight due to heightened security concerns.

The Oct. 12 bombings in Bali that claimed 190 lives dealt
another blow to the already-battered economy, with less new
foreign investment and further capital flight expected.

"However, the agreement, I hope, will be a good start to solve
problems that have caused both employers and workers to get
caught up in exhausting conflicts," said Sofjan.

The Jakarta minimum wage is often used as a reference for
nearby mayoralties, including Bogor, Tangerang, Depok and Bekasi.

Sofjan, however, warned that not all workers could expect to
receive the new monthly minimum wage, because some financially
troubled companies simply would be unable to afford to implement
the increase.

The 7 percent increase fell well short of the 25 percent rise
the worker unions were demanding.

Commenting on the new minimum wage, Tutur Suwito, chairman of
the non-governmental organization Jakarta Labor Institute (IPJ),
said the increase did not keep pace with the rise in prices of
basic commodities.

"We must keep in mind that the inflation rate, which at times
is used as a basis for the new minimum wage, often misleads as it
does not reflect the real price of basic commodities in the
market," said Tutur.

Jakarta's inflation rate hovered at 11.52 percent last year, a
small increase from 10.29 percent the previous year. This year,
economists predict inflation will still remain in double digits
given the poor economic conditions.

Though not completely satisfied with the outcome, Tutur said
the 7 percent wage increase had been agreed upon by the
tripartite committee and should therefore by honored by all
parties.

"There have been occurrences when a new minimum wage agreed
upon by the tripartite committee and passed by the administration
has been ignored by both employers and employees," Tutur said.

Last year, the tripartite wage committee agreed to a 38
percent increase for 2002, but employers refused to honor the
decision. The employers ended up filing a lawsuit against the
city administration over the increase with the Jakarta
Administrative Court.

Meanwhile, the city administration spokesman, Muhayat, said
Jakarta Governor Sutiyoso had yet to approve the new minimum
wage.

"The governor has yet to sign the document so the new minimum
has not yet been approved by the city administration," Muhayat
said.

The provincial minimum wage applies only to new employees and
workers with no previous experience. Other workers are paid above
the minimum wage.