Labor unions keen to extend, revamp minimum wage system

Labor unions keen to extend, revamp minimum wage system

Ridwan Max Sijabat, The Jakarta Post, Jakarta

Labor unions say the government should scrap the current minimum
wage system, which according to them does little to protect the
vast majority of workers outside the formal sector.

Most of the 76 labor unions registered with the Manpower and
Transmigration Ministry have urged the government to phase out
the minimum wage system and create a new one to cover not only
the 30 million workers in the formal sector but also the more
than 60 million others who work in non-taxable jobs.

A much smaller minority of unions, meanwhile, defended the
government's move to set minimum wages in the regions, a move
they say saved many low income workers from further hardship.

Rekson Silaban, the chairman of the Confederation of
Prosperity Labor Unions (KSBSI), said that many unions considered
the current minimum wage system no longer relevant.

"The regional minimum wages have been set annually not for the
sake of workers but for political interests to show the
government's commitment to protecting workers. But it is actually
a deception since the government has never paid attention to the
larger number of (workers) in the informal sector," he told The
Jakarta Post on Monday.

KSBSI and many other labor unions said the government should
design a national standard remuneration system to help protect
all paid workers both in both the formal and informal sectors.

A similar suggestion was raised by the Confederation of All-
Indonesian Workers Unions (KSPSI). The union said it was the
right time to propose a new remuneration system because of the
current economic difficulties, the zero growth of foreign
investment and the high unemployment rate of 10 percent.

However, KSPSI chairman and former manpower minister Jacob
Nuwa Wea said the existing wage system should be maintained for
the time being until the national economy recovered.

"The minimum wage system is still needed to prevent labor
conditions from deteriorating amid our economic difficulties.
Workers cannot do much to improve their social welfare because of
the oversupply in the labor market and workers' low quality and
productivity," he said.

Jacob said the government set minimum wages by sector because
of the diverse conditions of companies in different industries.
Companies in the mining and banking sectors were relatively
better-off and financially more able to pay workers above the
government-set minimum wage levels than those in the labor-
intensive manufacturing sector, he said.

Dita Indah Sari, who chairs the Indonesian Front for the
Struggle of Workers (FNBI), said workers and employers should
form a coalition to reform remuneration and production systems
and help improve the labor market's condition.

"Workers and employers should coalesce to force the government
to provide bank credits to the real sector in an effort to allow
the industry sector to reform their production systems and pay
their workers better," she said.

She said many labor-intensive companies could not afford to
pay their workers in accordance with minimum wages as they were
still using old machines in their production systems.

Therefore, they recruited new workers on a contract basis,
Dita said.

Harijantho, an executive of the Indonesian Footwear Makers
Association (Aprisindo), blamed the low quality of human
resources, high unemployment and the government's lack of
attention toward the real sector for the low wages paid to
workers.