Labor disputes

Six thousand workers went on strike recently in one of Indonesia's largest garment factories to demand higher wages. At the same time we hear calls from high government officials and intellectuals to redress the social imbalances in this country as the situation could easily become volatile.

One way to deal with social inequalities and avoid labor disputes would be to pay workers decent wages so that they can provide for themselves and their families. The argument from the company's managers that they are already paying the workers Rp 75 more than the daily minimum wage for workers in West Java is frankly ridiculous. What can one get with Rp 75 these days? A meager salary of Rp 4,675 per day is not an incentive to work hard and probably workers earning this amount cannot even feed themselves properly.

One of the reasons often given for keeping salaries at such low levels is that productivity in Indonesia is low compared to other countries. However, there are ways to improve that situation and one of them is by introducing profit-sharing schemes with workers who, as a result, feel more stimulated to improve their performance as well as their skills, productivity is given a boost, and the company's revenues are positively affected.

I remember reading an article years ago in the Harvard Business Review whereby a bankrupt company in California was bought by two young businessmen who within a year doubled productivity and made large profits. How? Through profit-sharing with workers, plus giving them bonuses and incentives (such as weekends in a nice hotel) for being creative on the job and finding new ways of working more efficiently. Having inherited a dispirited team, they turned it into a highly competent one.

OLVIA REKSODIPOETRO

Jakarta