Latief rejects firms' proposal on wage payment

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)