Keeping the wolf from the door
Could one, even a single person, survive in Jakarta with only Rp 671,550 (US$78) a month? It is truly difficult to conceive how one could manage to keep body and soul together on such a meager monthly income in this sprawling city of more than 8.5 million people.
But that is the amount of the minimum wage in the capital city that has been set for next year by the Jakarta Wages and Social Security Committee, a tripartite body consisting of representatives of the labor unions, employers and the municipal administration.
The new minimum wage represents a 6.3 percent increase over this year's level, or roughly the same as the estimated inflation rate for this year. The increase is certainly way below what the trade unions had been demanding but that seems to be the best figure the tripartite committee could come up with after taking into account labor interests and the commercial survivability of businesses.
Some companies may not be able to pay even this meager minimum wage, and the Jakarta governor still allows employers to apply for exemptions from the minimum wage regulation provided certain requirements have been met.
Certainly, the minimum wage is only a legal directive to protect workers from rapacious treatment, given their weak bargaining position, and does not include the transport and meal allowances that employers are required to provide for their workers.
A totally unregulated labor market would never work in the interest of workers, given the unequal status of employers and employees, and because in the bread-and-butter terms of jobs and wages, the interests of employers and workers often are diametrically opposed.
Companies are expected to pay more than the minimum amount to enhance peaceful industrial relations and to improve productivity. In fact, paying decent wages to employees is in the long-term interest of any business as a company that ruthlessly exploits its workers will not be able to maintain competitiveness over the long term as this sort of attitude frequently breeds violent industrial disputes at the expense of production.
Besides, unscrupulous exploitation of labor in the formal economy is rather more difficult in the current democratic era, where freedom of expression and association are guaranteed. The international market also has been shunning companies that do not treat their workers right.
The employers, already groaning under the heavy burden of invisible costs inflicted by a corrupt governance system, may attack the minimum wage policy as market distortion given that wage rises are not linked to productivity.
But it is completely unfair to tie the increase in the current minimum wage to productivity improvements as the minimum wage is still far from being enough to allow one to live decently as a humanly being.
We think that it is only after the minimum wage has been increased to such a level that it is sufficient to meet the minimum physical needs for a decent life that we can start talking about future increases being pegged to productivity improvements.
On the other hand, workers, including those in other provinces that are soon to decide on their respective minimum wages for next year, should refrain from strikes and other forms of protest that disrupt production, however disappointed they may be with their meager pay packets.
Trade union leaders should help secure the cooperation of their members by making them aware of the difficult circumstances our economy now finds itself in. Those who are still lucky enough to be employed in the midst of the current economic slump should realize that there are now more than half a million (latest figure) job seekers roaming the streets.
But mutual understanding and respect between workers and employers can be maintained only if the employers are also honest about how their businesses are doing, and not pretend that they are unable to pay their workers more than the minimum wage.
Thus, the new minimum wage seems to be the best trade-off between the interests of workers and employers based on the realization that an overly big rise could kill the goose that lays the golden egg by discouraging new investment in labor- intensive sectors.
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