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