Minimum wage raised by 10%

Minimum wage raised by 10%

JAKARTA (JP): Minister of Manpower Abdul Latief announced
yesterday the new minimum wage levels for 25 of Indonesia's 27
provinces, showing increases averaging 10.63 percent, with
implementation starting in April.

Latief told journalists in his office that the increase was
"the most that we could ask for" given the present outlook of the
Indonesian economy.

Stressing that the government is concerned about improving
workers' welfare, he said "we have to take into account other
factors, especially the nation's economic prospects, so that
minimum wage increases will not disrupt our economic growth."

The increase is higher than the 8.6 percent inflation
Indonesia registered in 1995, but the new wage levels in most
provinces are still 93 percent of what the government considered
the minimum level required for subsistence, which is the
equivalent of the cost of a 3,000 calorie intake a day.

Latief said the minimum wages should reach the minimum
subsistence level by April 1998 at the latest.

The average increase is also the lowest in the last four
years. In 1993, the government hiked the minimum wages by an
average of 17.76 percent, in 1994 by nearly 30 percent, and last
year by an average of 18.6 percent.

Under the new increases, the daily minimum wage for the
greater Jakarta area will be Rp 5,200 ($2.26) compared to Rp
4,600 at present, while in Surabaya, Indonesia's second largest
city, the new wage level is Rp 4,000, up from Rp 3,700. The
minimum wage level for Batam, the highest in the country, will be
increased to Rp 7,350 from Rp 6,750. The new minimum wage for
East Nusa Tenggara and North Sulawesi will be announced later.

The minimum wage levels are the result of deliberations
involving representatives of employers, workers and the local
administration in each province. But the minister has the final
say in every decision.

Latief turned down a proposal forwarded last week by a council
representing workers, employers and the government, that the
minimum wages represent solely basic pay, excluding allowances.

In a new decree announced yesterday, the minister ruled that
the minimum wages include basic wages and "fixed allowances",
which are defined as those not related to the presence or
productivity of the workers.

Latief, a former businessman, explained that the government
could not meet the council's proposal at this time because "it
would be a burden for some companies."

The question of whether or not minimum wages should include
allowances has been one of the main sources of conflict between
workers and management in recent years.

Latief said companies that have already been paying their
workers above the minimum wage levels should not attempt to
reduce them.

The new decree allows companies to apply for exemptions, for a
period of up to 12 months, from the new minimum wage levels if
they cannot afford it. But this will require subjecting their
finances to official scrutiny.

He appealed to workers not to resort to strikes in pressing
their demands, unless as a last resort when negotiations failed
to resolve the conflict.

Last year, according to the minister, saw 297 workers' strikes
in Indonesia, one more than in 1994. Sixty five percent of the
strikes were over wages.

The number of industrial actions in Indonesia is expected to
hover between 200 and 250 a year, in part because employers are
still depriving workers of their basic rights, and in part
because workers are becoming more demanding.

Latief reaffirmed his ministry's motto "our heart and thoughts
go to workers and job seekers" adopted since last year, and will
continue to be used in 1996."To be fair, we've already seen the
result of this motto, although we have to admit that there were
weaknesses and obstacles in our work," he said. (03)