Raising minimum wages
Few people would argue against the 10 percent average increase in the minimum wages in the 27 provinces announced Wednesday, especially if the figure was reached after what Minister of Manpower Abdul Latief described as "very democratic" deliberations, involving representatives of the government, employers and workers.
Some union leaders may complain that the increases are too small and few employers are expected to object citing financial difficulties. In view of the democratic process, we expect the ruling to be widely observed and accepted eventually by employers, workers and their union representatives.
As much as everyone would like to see workers improve their welfare, there are factors that constrain the government from awarding a larger increase in the minimum wages. The competitiveness of the nation's industry, and concerns about inflationary pressures are probably two main factors that were taken into consideration when discussing raising minimum wages.
What most of us tend to forget, however, is that minimum wages in Indonesia is also a moral issue, besides an economic and political issue. As Latief has pointed out, the 10 percent increase would take the average minimum wage levels to only 95 percent of what is perceived as the minimum physical requirement -- calculated on the basis of the costs to support a daily calorie intake of 3,000 for a single worker. This means that there are hundreds of thousands, probably even millions of Indonesians, who are eking a living barely enough to support himself or herself, let alone a family. Morally, this is not acceptable. The country has tolerated this situation and allowed economic and political arguments to override moral argument.
It is hard to fault the government entirely for this moral shortcoming. To be fair, they have progressively raised the minimum wage levels since 1993 by an accumulative total of 125.6 percent. Back then, the minimum wages ranged between 70 to 85 percent of the minimum physical requirement. The country has come a long way from that deplorable situation, but still has some way to go. It is hoped the government will make good on its promise to bring the minimum wages across the nation equal to the minimum physical requirement next year.
We need to reach that point quickly in order to set new criteria to fix the minimum wages. The minimum physical requirement is deficient, for it is a measure of subsistence for a single worker. Already, there are new concepts being proposed to link minimum wages with other indexes that would take into account factors such as raising a family, access to basic health and education facilities for their children. Once we have reached the point where minimum wages allow workers a decent living, we can start linking future increases to productivity.
Even as we wait for minimum wages to reach a morally acceptable level, the government could act on the issue of corruption in the administration, an issue union leaders and employers believe is the reason why wages in this country are depressed. Estimates of "invincible costs" that companies have to pay in the form of government levies -- legal and illegal -- range between 30 to 40 percent of total business costs. Labor in contrast amounts to an average of 9 percent.
Minister Latief set the scene last year by slashing dozens of levies at his ministry. But his initiative was not followed by fellow cabinet ministers, and the entire campaign faded away. We can only hope the government's determination to improve the welfare of workers is accompanied by an equally strong political will to deal once and for all with the problem of corruption.