Malang companies fret over proposed new minimum wage

Wahyoe Boediwardhana, The Jakarta Post, Malang, East Java

More than half of 200 companies in Malang, East Java, would go out of business if the local governments there agree to set a Rp 710,000 (US$71) minimum monthly wage for workers.

Deputy chairman of Indonesian Businessmens Association in Malang, Samuel Molindo, said that of the more than 200 companies there, most of them were medium-sized businesses.

He said that the new minimum wage, proposed by Malang Mayor Peni Suparto and submitted to the governor for approval, was higher than the association's proposal.

The municipal administration proposed a 24 percent hike in the minimum wage, which currently stands at Rp 575,300 per month, while the association proposed a 13 percent increase, or Rp 653,000.

"Frankly speaking, most companies could not afford to pay a minimum wage of over Rp 700,000 since they have been burdened by higher operational costs following the government's move to raise fuel prices," Samuel said, adding that 10 companies had already gone out of business following the fuel price hike.

Head of Malang city's Manpower Office, Darussalam Subekti, acknowledged that many companies could not survive if the new minimum wage was approved and predicted many would only last another three months. He urged the company and its workers to sit together to agree on a minimum wage that recognized their respective positions.

"In this case, they can reach win-win solution. The workers can cope with their living expenses while the company still can remain in business," Darussalam.

The Manpower Office's idea was welcomed by Samuel, saying that workers and company management should all sit together to compromise on the amount of the minimum wage.

"But not more than Rp 700,000 because more than 50 percent of companies in Malang might postpone paying the minimum wage. It would be useless if the minimum wage was set at Rp 710,000 but then companies asked for a postponement in paying it," he said.