Mixed reactions greets minimum wage decision

JAKARTA (JP): Union leaders said yesterday the government's planned 10 percent increase in the minimum wage level was not sufficient, while the chairman of the Chamber of Commerce and Industry urged all members to comply.

The increase was not satisfactory because it did not guarantee workers decent living conditions, Atika Karwa, deputy chairman of the Federation of the All Indonesian Workers Union (FSPSI), told Antara.

The use of the minimum physical requirement as a reference in setting the minimum wage was inappropriate, Atika said, pointing out it was calculated based on wholesale prices and not on the retail prices workers pay.

The ideal minimum wage for a worker was Rp 10,000 a day, based on the needs of a worker and his or her family, he said. "It will take a serious effort by the government to improve the welfare of workers," he added.

FSPSI had officially asked for a 16 percent increase in the minimum wage, though some unions under the federation had called for an increase of up to 20 percent in major industrial centers like Jakarta and Surabaya.

The Indonesian Prosperous Labor Union (SBSI), not recognized by the government, denounced the 10 percent hike.

"This is way below expectations," SBSI deputy chairman Tohap Simanungkalit told The Jakarta Post.

"What kind of quality do you expect from workers whose earnings provide only 90 percent of the minimum physical requirement?" he asked.

He also set Rp 10,000 per day as an ideal, a minimum wage level which would encourage workers to improve their skills.

"This is not impossible, if the government has the will," he said.

Tohap said an SBSI study found, on average, labor made up 9 percent of total production costs. The biggest component, amounting to 40 percent, is what business called "invisible costs", he said.

Another SPSI executive, Wilhelmus Bokha, told Antara various business levies by the government, including many illegal ones, were at the root of Indonesia's "high-cost economy".

Many companies had demanded these invisible costs be eliminated so they could pay workers more, Bokha said.

He warned the low wages paid to workers could threaten production. "Workers who earn low wages are vulnerable to agitation and calls for demonstrations," he said.

Aburizal Bakrie, chairman of the Chamber of Commerce and Industry, said he hoped all companies could comply with the new minimum wage policy.

Aburizal however rejected the suggestion by some business associations that minimum wage levels should be based on sectors rather than regions.

"It's impossible for us to set different minimum wage levels for steel workers and textile workers. We can only set them by regions," he said.

He said increases in minimum wages should be linked with workers' productivity. "If productivity does not increase, then employers have to make trade-off (in costs) elsewhere," he said without elaborating. (08/jsk/emb)