Minimum wage increase unlikely this year: Official
Minimum wage increase unlikely this year: Official
JAKARTA (JP): The government is not likely to increase the minimum wage level this year due to the fact that most private businesses have been severely affected by the economic crisis, a senior ministry of manpower official has said.
The official, speaking on condition of anonymity yesterday, said it would be hard to implement the annual wage hike this year when millions of workers are facing dismissal following the bankruptcy of many private companies.
"It would be very unrealistic to raise the regional minimum wage rates as our economic crisis worsened," the official told The Jakarta Post.
Last week, the chairman of the Federation of All-Indonesian Workers' Union, Datoek Bagindo, proposed a 20 percent wage increase for this year saying workers needed it in order to cope with the skyrocketing prices of basic commodities.
"It is not a pure hike, the wage will (actually) remain the same because the government has set a 20 percent inflation rate for the 1998/1999 fiscal year," Antara quoted Datoek as saying.
In April last year, the government increased the minimum wage level in all 27 provinces by an average of 10.07 percent. The monthly minimum wage of a worker in Jakarta then was at least Rp 172,000 (about US$16) under the scheme.
The minimum wage averages 95.32 percent of a worker's minimum physical requirement. The physical requirement is calculated on the basis of the local costs of a daily intake of 3,000 calories.
In 1996, the government required all private companies to calculate wages on the basis of a 30-working-day month, abandoning the traditional practice of setting a basic daily wage.
Bomer Pasaribu, one of Datoek's deputies, said that unemployment for this year would reach 13.5 million people, mostly blue-collar workers.
"The government has not announced its decision on the wage hike because it is worried about layoffs," Wilhelmus Boka, another one of Datoek's deputies, told the Post yesterday. Boka was included in the team that usually negotiates the annual increase every year, but he said the team had not yet met since October last year.
Boka said it was urgent to raise wages because workers have severely suffered from skyrocketing prices.
"Their low purchasing power has been worsened by the current crisis," Boka said.
He said a company should first prove its inability to raise worker wages, otherwise many companies would use the crisis as a pretext to fire workers or to freeze their wages.
The chairman of Yogyakarta's Association of Indonesian Young Entrepreneurs, Dwiyanto, disclosed recently that 75 percent of his members were no longer able to service their debts and pay their workers.
"If this situation continues, most of our members will face bankruptcy," he said. (prb/swa)