Pay rise threatens shoe factories

Pay rise threatens shoe factories

SERANG, West Java: Shoe makers received the government's policy to raise workers' minimum wages with fears that it will lead many small and medium scale companies to bankruptcy.

Deputy chairman of the Indonesian Shoe Producers Association Anton J. Supit said yesterday that when the policy goes into effect in April, scores of shoe factories in industrial centers in the province may sound the death knell.

"They are financially weak," he said, Antara reported. He added that 75 percent of about 300 shoe factories across Indonesia are small and medium sized.

The minimum daily wage in Jakarta and its surrounding industrial centers of Bogor, Tangerang and Bekasi will be increased from Rp 3,800 (US$1.7) to Rp 4,600.

Anton said the increase in daily wages would increase the production cost from 16 percent to 20 percent.(pan)