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.