Keeping the wolf from the door

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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