Minimum wages raised by 15%

Minimum wages raised by 15%

JAKARTA (JP): The Ministry of Manpower announced yesterday it
will increase minimum wages by an average of 15 percent from Aug.
1.

The move is intended to arrest the decline in real wages
caused by soaring inflation, Director General of Industrial
Relations and Labor Standards Mohammad Syaufii Samsuddin said.

Acknowledging that the hikes barely made up for the massive
increases in prices since the last increase in April 1997,
Syaufii said workers should nevertheless find them helpful in the
present time of economic crisis.

The government traditionally increases minimum wages on April
1. This year, the increase was frozen by the government of then
president Soeharto because of the economic crisis, a decision
widely criticized by trade unions.

President B.J. Habibie, who replaced Soeharto on May 21, has
made the provision of social safety net programs his chief
priority to help the poor cope with the harsh economic
conditions.

The government said inflation was running at 56.7 percent in
the first six months of this year. It has predicted inflation
will reach 80 percent for this year. In addition, the wage
increases must be discounted by the 11 percent inflation recorded
in 1997.

The nominal minimum monthly wage for a single worker in
Greater Jakarta (Jakarta, Bogor, Tangerang and Bekasi) will
increase to Rp 198,500 (US$14.10) from Rp 172,000.

The minimum wage level in the industrially designated zone of
Batam, including the islands under the Batam Development
Authority, will be hiked to Rp 270,000 from Rp 235,000 a month.

Batam has the highest minimum wage level on account of the
high cost of living there. Yogyakarta still has the lowest
minimum wage level, at Rp 122,500 a month.

Syaufii said that because of soaring inflation, the increases
would still leave the average minimum wage across the country far
lower than what was officially perceived as sufficient to meet
the minimum physical requirements, or the subsistence level.

The minimum physical requirements are calculated on the basis
of the cost of a daily intake of 3,000 calories for a single
worker.

"The minimum wage will fall to 75.8 percent of the minimum
physical requirement from 95.32 percent last year," he said.

Syaufii said the increase was the result of negotiations
involving representatives of the government, employers and
workers, with the final proposals coming from all the provincial
governors.

Syaufii said companies who felt the increase was too
burdensome could apply for exemptions but they would have to
allow their books to be audited by outsiders before being granted
the relief.

"Companies who feel unable to raise their workers's wages in
accordance with the new decree can apply for exemptions but they
have to secure the agreement of their workers," he said.

He urged all companies that were not severely hit by the
economic crisis to give the mandated wage increases.

Under the current manpower law, failure to pay the minimum
wages is punishable by up to three months imprisonment and a fine
of Rp 100,000. But in the new manpower law which will come into
effect in October, the maximum punishments have been raised to
two years imprisonment and a fine of Rp 200 million.

Representatives of trade unions and employers gave the news a
lukewarm welcome yesterday.

Wilhelmus Bokha, deputy chairman of the Federation of the All
Indonesian Workers Unions, said his organization had proposed an
increase of at least 30 percent.

"It's better than nothing. We could not force employers to
meet our demand because of the economic crisis," he said.

Poerbadi Hardi Prajitno, secretary-general of the Association
of Indonesian Employers (Apindo), said that since representatives
of both employers and unions were consulted, both should give
their support to the wage increases.

"Apindo backs the government's decision reached through
democratic deliberations involving representatives of workers,
employers and the government," he said.

Poerbadi regretted that the decision to increase the minimum
wages by 15 percent across the board did not take into account
regional differences.

The economic conditions and consumer prices in Yogyakarta were
different from those in Batam, so that the increase in minimum
wages should also have been different, he said, citing an
example.

"The increase in Batam should have been higher than in
Yogyakarta. This was actually reflected in the original proposals
submitted by provincial governors."

Poerbadi suggested that employers who could not award pay
hikes because of the economic crisis should make their books more
transparent to ensure workers could accept their reasoning and
prevent them from going on strike. (rms)

Table: Monthly Minimum Wages By Region

No. Province Present Aug. 1
-------------------------------------------------------
1. Aceh 128.000 147,000
2. North Sumatra 151,000 174,000
3. West Sumatra 119,000 137,000
4. Riau 151,500 174,000

Batam 235,000 270,000
5. Jambi 119,500 137,500
6. South Sumatra

Onshore 127,500 146,500

Bangka-Belitung 135,000 155,500
7. Bengkulu 127,500 146,500
8. Lampung 126,000 145,000
9. Jakarta 172,500 198,500
10. Central Java 113,000 130,000
11. Yogyakarta 106,500 122,500
12. South Kalimantan 125,000 144,000
13. West Kalimantan 126,500 145,500
14. Central Kalimantan 138,000 158,500
15. East Kalimantan 153,000 176,000
16. South Sulawesi 112,500 129,500
17. Southeast Sulawesi 121,000 139,000
18. Central Sulawesi 106,500 122,500
19. North Sulawesi 118,000 135,500
20. Bali 141,500 162,500
21. West Nusa Tenggara 108,000 124,000
22. East Nusa Tenggara 106,500 122,500
23. Maluku 136,000 156,500
24. Irian Jaya 170,000 195,500
25. East Timor 138,000 158,500
26. West Java

Region I: Bandung, Sumedang,

Bogor, Tangerang, Bekasi,

Serang, Purwakarta, Karawang,

Bandung mayoralty, Tangerang mty 172,500 198,500

Region II: Lebak, Pandeglang 157,500 181,000

Region III: Cirebon, Indramayu,

Sukabumi, Cianjur, Cirebon mty,

Sukabumi mty 145,500 167,500

Region IV: Tasikmalaya, Garut,

Ciamis, Kuningan, Subang,

Majalengka 139,000 160,000
27. East Java

Region I: Surabaya mty, Gresik,

Sidoarjo, Mojokerto, Malang,

Pasuruan, Probolinggo, Madiun mty 132,500 152,500

Region II: Kediri mty, Madiun,

Banyuwangi, Sumenep, Ngawi,

Magetan, Tuban, Jember 127,500 146,500

Region III: Jombang, Situbondo,

Lamongan, Lumajang, Ponorogo,

Tulungagung, Bangkalan, Nganjuk,

Bondowoso, Bojonegoro 121,000 139,000

Region IV: Trenggalek, Pacitan,

Pamekasan, Sampang, Blitar 116,500 134,000

Source: Ministry of Manpower