Only 32 firms file objection to minimum wage hike

Ahmad Junaidi, The Jakarta Post, Jakarta

The city administration revealed on Tuesday that only 32 companies, among 25,000 private firms here, have officially filed objections over the new minimum wage - amounting to Rp 596,266 (US$60) - due to financial problems.

No more companies were expected to file such an objection as the deadline to make the complaint was on Monday.

Head of the City Manpower Agency Ali Zubair said the 32 companies would be audited by public accountants before their objections were accepted.

"Only 32 companies so far have submitted their proposals. Most of the 25,000 companies here have paid their workers according the new minimum wage," Ali told reporters.

He said most of the 32 companies, were small- and medium-sized businesses, mostly garment and food producers, with between 50 and 1,000 employees.

Only five of the 32 companies' proposals for a grace period have been approved by their respective unions as required by the manpower regulation.

The city administration, through gubernatorial decree No. 3052/2001 decided in December to increase the monthly minimum wage to Rp 596,266 from last year's minimum wage of Rp 426,250. The decree became effective on Jan. 1, this year.

The Indonesian Employers Association (APINDO) previously objected to the decision saying that many of its members would go bankrupt due to the financial crisis if they had to pay their workers higher wages.

Ali Zubair said the administration would soon evaluate the financial conditions of the 32 companies which filed the objections.

"By the end of this month, we will announce whether their objections are legitimate or not," Ali said.

He said the companies demanded a delay of between three months and one year to pay their workers based on the new minimum wage.

Separately, councillor Tubagus Sofyan Sahuri of the Indonesian Democratic Party of Struggle asked the administration to take stern actions against companies who are financially secure but refused to obey the minimum wage decree.

"If the companies do not pay their workers despite being financially able to do that, the administration should impose sanctions on them," Tubagus who is a member of Commission E for Social Welfare Affairs, said.

However, he urged the administration to make wise choices with companies which had really suffered during the financial crisis, to avoid mass layoffs or bankruptcy.

According to data from economists, Indonesian workers have some of the lowest salaries and are some of the least productive in Asia. Because the government increased the wages, economists are urging the laborers to increase their productivity.

APINDO earlier announced that its members were only able to pay their workers Rp 540,000, instead of Rp 591,266 a month.

In a protest of the gubernatorial decision on the new wage, it filed a lawsuit with the Jakarta Administrative Court, demanding the court to annul the gubernatorial decree.

The court decided that the application of the minimum wage should be delayed pending the final decision on the lawsuit. But the court canceled that temporary injunction shortly thereafter.

Despite the lawsuit, Governor Sutiyoso insisted that the companies should obey the decree, giving them until Jan. 21 to submit their objections, which include financial reports that prove the higher wage would seriously hurt the company.