Productivity to low: Minister

Productivity to low: Minister

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo
blamed yesterday the non-oil and gas export slowdown in recent
years on the low productivity of Indonesian workers, which had
not risen to match the rapid rise in government-mandated minimum
wages.

Speaking at a hearing of House Commission VI for industry and
investment, Tunky said the lower growth of non-oil and gas
exports was caused by the slow rise of workers' productivity
compared to their annual wage hikes.

"Workers' wages in manufacturing, in particular, have
increased much quicker than their productivity," he asserted.

Tunky said that between 1985 and 1995 worker's salaries
increased 170 percent while their productivity only increased 75
percent.

"In Malaysia and Thailand over that period, workers' salaries
grew by an average of 100 percent and productivity increased 90
percent, providing a stable basis for industrial development," he
said.

He said the annual growth rate of workers' wages in Indonesia
between 1988 and 1993 was 14.3 percent -- higher than most
Southeast Asian and South Asian countries.

In that period, Thailand increased its workers' salaries 9.5
percent a year, Sri Lanka by 5.4 percent and China by 5.9
percent, while India lowered its workers' wages 6.2 percent a
year.

But Tunky admitted that, despite the rapid rise in wages,
workers' wages in Indonesia were far lower than those in
Thailand, India and Malaysia.

Wages in Indonesia, then 43 U.S. cents an hour, were among the
lowest in South Asia and Southeast Asia in 1993. Thailand's were
US$1.04 an hour and India's were 56 U.S. cents an hour.

Tunky said yesterday that productivity was determined by the
technology applied by a company and the skills mastered by its
workers.

"Low productivity is the result of minimum-technology, labor-
intensive operations. To increase productivity, a company must
make large investments in technology and human resources
training," Tunky said.

He said the government's recent move to increase workers'
wages should not decrease the competitiveness of products.
Instead it should encourage companies to increase their
efficiency and optimize production processes.

Last week, the government mandated an average minimum wage
rise of 10.07 percent nationwide.

Many observers, including legislators at yesterday's hearing,
considered the hike was insufficient to meet workers' basic daily
needs.

According to the Ministry of Industry and Trade, the growth of
plywood and wood product exports rose from 9.9 percent in 1991 to
14.3 percent in 1992 and 31.6 percent in 1993. But the growth of
these exports fell to 5.6 percent in 1994, 3.7 percent in 1995
and 2.3 percent in the first six months of last year.

Meanwhile, textile, textile-related products and footwear
exports grew 43.7 percent in 1991 and 45.1 percent in 1992. But
this growth fell to 6.1 percent in 1993 and to minus 6.7 percent
in 1994 before rising to growth levels of 6.1 percent in 1995 and
4 percent in the first half of 1996.

Exports of electronic products also grew steadily until
reaching 149.3 percent annual growth in 1992 from 110.7 percent
in 1991. This also dropped to 43.2 percent in 1993, 53.9 percent
in 1994, 23.7 percent in 1995 and 18.1 percent in mid-1996.

Plywood, wood, textile and electronics industries are
categorized as labor-intensive sectors.

The ministry said the annual increase in workers' wages in
textile and leather industries, averaging 11.6 percent between
1989 and 1992, was higher than in other sectors.

But the annual productivity growth of this sector was only 6.8
percent.

By comparison, wage rises in the wood product industry
averaged 0.2 percent while productivity growth was 2.5 percent.

In the food and beverage industry, wages rose 8.8 percent a
year while productivity increased 14.9 percent. (pwn)

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