Open audit of firms called for

JAKARTA (JP): The government should first conduct open audits on the financial situations of companies before granting their requests for exemptions from the minimum wage regulation, a lawyer says.

Teten Masduki, head of the Workers Division at the Indonesian Legal Aid Foundation, said that the audits should be completed by public accountants, not those appointed by the government. The secrecy which surrounds government audits of companies is reason enough for some people to oppose the exemption, he pointed out.

Teten was responding to the recent government decision to exempt 215 companies from the minimum wage regulation that went into effect on April 1, accepting that they were experiencing financial difficulties in enforcing it.

Four other companies who applied for exemption were turned down because they could not back up their claims with any data. This is the largest exemption ever granted by the government.

The new minimum wage levels saw an average increase of just over 10 percent. At the same time, the government required companies to pay their workers, temporary or permanent, on the basis of 30 working days.

Teten acknowledged that some companies do face many financial difficulties due to the overall economy, including high bank interest rates, which range between 16 to 20 percent.

However, he pointed out, the wages constitute only a fraction of total production costs. The wages of textile company workers, for instance, constitute only four percent of total textile production costs.

Lendo Novo, a staff member of the Indonesian Textile Association, recently said that, compared to other Asian countries, Indonesian workers' measure of cost was low.

In Vietnam, workers' wages constitute 9 percent of total costs, South Korea's, 14 percent and Japan's 20 percent.

Teten said that most of the companies applying for exemptions are labor-intensive, with 8,000 to 12,000 workers. (16)