Minimum wage one of core labor problems

By Fauzi Abdullah

JAKARTA (JP): The article by Amir Santoso which appeared in the Insight column of this newspaper on April 25 may be interpreted, among other things, as a call for further reflection on a number of points in our labor policy.

Among these are workers' wages and welfare, the right to organize and the supervision of industries, as well as prevention of collusion between government officials and businessmen.

I feel enticed to respond to that call because any discussion of the problem brings us to the structural causes of the labor unrest in Medan and elsewhere. Given the span which those policies cover, this article will focus on the aspect of wage policies.

There are three factors which call for our attention in regard to this matter: the wage level, the definition of what constitutes wages and the process through which wage levels are determined.

At the time when Sudomo was minister of manpower, the government promised to set the minimum wage at a level equal to that of the minimum physical needs index of workers. Sudomo promised that regional minimum wages would be set at the same level as the minimum physical need level for 1988 (the end of the Fourth Five Year Development Period, Pelita IV).

Later, another manpower minister, Cosmas Batubara, also clearly stated that the minimum wage level would be the same as this index figure at the end of the Fifth Five Year Development Period Pelita V in March of this year, and that the minimum wage would thereafter be measured on the basis of the minimum living needs index, which is 20 percent above the level of the minimum physical needs index.

What is happening now? In a number of regions minimum wages are still below the minimum physical needs level. One of the posters carried by the strikers in Medan proclaimed: "Rp 3,100 is only enough for meals." Rp 3,100 is the minimum wage for Medan.

And it should be noted that the minimum physical needs standard that is being used as a yardstick is valid for bachelors, while many workers have families. Thus, the workers were dissatisfied not only with their adverse conditions but with the unfulfilled promises. Add to this the fact that they must struggle to survive amid the opulent lifestyle that is being displayed by a few people.

On the second point: The definition of wages in the minimum wage regulations is not very clear on the question of who the minimum wage is intended to apply to. Does it apply to workers who are in the lowest positions -- with zero years of experience -- or to all workers? This vagueness gives employers the opportunity to equate those who have only just been employed with those with years of experience as far as wages are concerned. It is not surprising that in a number of strikes one of the workers' demands has been that wages be set proportionate to the level of experience.

This definition is also vague on the matter of wage components. The minimum wage regulation says that the regional minimum wage consists of the basic salary, amounting to at least 75 percent of the total take-home pay, and regular bonuses amounting to a maximum of 25 percent of the total wage.

The regulation does not make clear what is meant by regular bonuses.

Only a few regional offices of the Ministry of Manpower, among them the Jakarta branch, have issued circulars explaining what constitutes regular bonuses. As a consequence many factories include all sorts of components in the minimum wage count. However, when workers are absent from work with validated excuses they are paid only the basic salary, which is less than the minimum wage.

In other words, the vagueness of the definition provides employers with a tool for controlling their workers -- to force them to work so that their already meager salaries are not slashed. This is also a tool for prodding workers who have worked for longer periods to quit, since their wages are put on a par with that of new workers.

As is well known, the process of wage determination is a closed one and it takes a long time to complete. Minimum wage proposals for any region are submitted by the Regional Wage Examination Board (DPPD) to the governor of the province in order to get his recommendation.

This recommendation, together with the original proposal, is then sent to the Minister of Manpower for approval. The Minister of Manpower's Regulation No.1 and Regulation No. 20, dated 1971, prohibit the disclosure of any papers, reports or notes drawn up by the DPPD and DPPN, except to members of the board.

Neither the workers nor the public know what considerations are used to determine the regional minimum wage for any given period or region, and much less do they have a say in the process.

Thus they only get to know the decision and they are faced with the choice of either using it as a basis for making claims when the real wages are below the regional minimum wage level, misapplying it by regarding the regional minimum wage as just the basic salary, thus demanding food and transport money, premiums and other benefits, or openly opposing it, as happened in Medan.

If this policy making process, so important to workers, remains closed and continues to be done in conditions in which the freedom to organize are quite limited, neither dialog nor negotiation can occur in the determination of policies and in the solution of conflicts.

If such a process of dialog fails to occur over an extended period of time, the capability of societal groups, workers in particular, to negotiate will decline because of the lack of familiarity or exercise. If this is what is now happening, then greater trouble can be expected in the future.

The writer is the head of a labor study-center based in Bogor.