Latief rejects firms' proposal on wage payment

JAKARTA (JP): Minister of Manpower Abdul Latief has flatly rejected a proposal by industry associations that the monthly fee paid to the state workers insurance company PT Jamsostek be remitted to allow companies to increase workers' minimum wage.

Latief told reporters after attending the plenary session of the House of Representatives late Tuesday evening that the idea proposed by four industry associations earlier that day was "irrelevant".

"It is the employers' obligation and the workers' right to participate in the Jamsostek program, while the UMR (the minimum wage) is something that is to be determined in accordance with workers' needs and employers' capabilities," he said.

The minimum wage is usually established annually after consultation among representatives of the government, employers, and workers.

Due to the harsh effect of the lingering economic crisis, four industry associations -- Aprisindo (Association of All Indonesian Shoe Industries), API (Indonesian Textile Association), AMI (Association of Indonesian Manufacturing Companies) and APMI (Association of Indonesian Toy Industries) -- have said that it would be difficult for companies to sustain an increase in the minimum wage this year.

But if it could not be avoided, they proposed that the increase be circumvented from the monthly fee companies have to pay to state workers insurance company PT Jamsostek.

Companies are required to pay about 7 percent of the basic salary for each worker to PT Jamsostek each month.

The minimum wage differs from one area of the country to another.

The current minimum monthly wage in Greater Jakarta is Rp 172,000.

The highest minimum level paid is for those working in the industrial-designated zone of Batam, Riau, at Rp 220,500. Yogyakarta has the lowest minimum wage level at Rp 106,500.

The proposal to channel Jamsostek fees to assist in a wage increase was aired by the associations Tuesday afternoon after a discussion on the minimum wage, which was also attended by representatives from the All-Indonesia Workers Union Federation (FSPSI) and the government.

Latief, however, later gave the proposal a cold shoulder, maintaining that the minimum wage hike should not be an excuse for companies to stop their workers from participating in the government run insurance scheme.

"By law, companies refusing to participate in the program can be sued," Latief warned, referring to Law No. 3/1992 on Jamsostek which requires every company to join the Jamsostek program.

PT Jamsostek has assets of Rp 5 trillion (US$715 million).

The use of PT Jamsostek funds recently came under public scrutiny when it was discovered that Latief had allocated funds from the insurance company to help pay for deliberations of a controversial manpower bill by legislators.

He said Rp 3.1 billion in Jamsostek funds were needed to pay for secretarial services and accommodation for the deliberations held at a hotel.

When the public outcry reached its peak, Latief later claimed that he made the decision under President Soeharto's instruction. (aan)