Tue, 21 Nov 2000

Monthly minimum wage to rise by 30 percent in eight provinces

JAKARTA (JP): The official monthly minimum wage levels in eight provinces will rise by an average of about 30 percent as of Jan. 1, 2001.

Syaufi'i Syamsuddin, director general for industrial relations and labor standards at the manpower and transmigration ministry, told The Jakarta Post here on Monday that Aceh, Riau, East Kalimantan, North Sumatra, Central Sulawesi, East and West Nusa Tenggara and the Riau archipelago were the eight provinces in which increases had been decided upon.

Increases in the other provinces are still being negotiated.

Syaufi'i said the increases of around 30 percent were based on economic growth of 4 percent and double digit inflation in the 2000 fiscal year.

"Despite the increases, minimum wages have yet to reach the levels where they can satisfy minimum physical requirements, except in Jakarta," he said.

In April the government raised minimum wage levels across the country between 15 percent and 55 percent.

Syaufi'i added that the remaining provinces have also proposed minimum wage increases of an average of 30 percent for the 2001 fiscal year but they have yet to be approved by the respective governors.

He said the Jakarta tripartite wage committee had proposed an increase in the monthly minimum wage to Rp 486,000 from the current level of Rp 286,000 but that this has yet to be approved by governor Sutyoso.

"And the minimum wage level in Jakarta's outlying areas -- Bekasi, Bogor and Tangerang-- is expected to be of the same order as in the city because of the similar cost of living in these areas," he said.

He insisted that the central government no longer had authority in determining minimum wage levels because based on Ministerial Decree No. 226 which was issued in September, the monthly minimum wage should be determined by the governor together with the provincial wages committee in line with the implementation of regional autonomy next year.

However, he stressed that the remaining provinces should announce increases in their minimum wages soon in order to prevent workers from becoming restless.

"According to this decree and Ministerial Decree No. 394, the provincial administrations should have announced their minimum wage hikes on Nov. 2, two months before they take effect. And, we will continue to encourage governors to announce the hikes by the end of this month," he said.

Syaufi'i also reminded employers to pay annual bonuses in time in line with the approaching Christmas and Idul Fitri holidays, saying a postponement of the annual bonuses could lead to labor strikes.

"Employers should be extra cautious in managing their finances because the annual bonuses and the increases in the minimum wage will become payable at almost the same time," he said.

When asked about the ongoing review of a Ministerial Decree on higher severance and long-service payments, Syaufi'i said there would no fundamental changes made to the decree and that it still remains effective.

"Foreign investors' fears that with the decree workers will rush to quit their jobs are groundless. Of the utmost importance is that employers should not dismiss their employees arbitrarily and that higher severance and long-service payments should be considered as normal as the workers have contributed to the companies where they are employed," he said.

President Abdurrahman Wahid has recently asked Manpower and Transmigration Minister Al-Hilal Hamdi to review the decree which he said has hampered foreign investment in Indonesia.

Syaufi'i said the foreign investors' objections to the decree was more political than economical because so far, no worker has quit their job just to gain the higher merit service payment.

"And foreign investors will not face financial difficulties to pay higher merit service payment in accordance to the decree if only a few of their workers resign," he said.

He added foreign investors should bear in mind that their workers would not rush to quit their job as it is very difficult to seek employment under the present situation. (rms)