Minimum wage one of core labor problems

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.