Reduce wide salary gap, says minister

A'an Suryana and Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

A high-ranking government official complained on Monday that employers here had yet to provide proper welfare for the workers, resulting in widespread industrial relations disputes.

In order to reduce the disputes and to create better welfare for workers, employers must be willing to reduce the wide salary gap between executives and workers, said Minister of Manpower and Transmigration Jacob Nuwa Wea.

"The root cause of industrial relations problems here is not workers, but mismanagement by employers. The latter pay executives too much, while neglecting the welfare of workers."

Therefore, Jacob said, better welfare for workers was essential in order to arrive at harmonious industrial relations and better productivity by workers.

This could be achieved by reducing the salary gap, which meant cutting the salaries of executives and then transferring the money thus saved to workers.

"The salary gap is terrible, it sometimes reaches a ratio of 1:50 and, in some cases, even 1:100," Jacob told labor activists and reporters at his office.

The labor activists had visited Jacob at his office, demanding the ministry declare May 1 -- Labor Day -- an official holiday.

Despite disagreeing with the demand, Jacob finally said that he would convey it to the President for consideration.

According to Jacob, Indonesia's minimum wage of around US$35 per month was the lowest in Asia, after Bangladesh.

Such low wages had often motivated workers to stage rallies or even strikes in an attempt to force employers to listen to their demands.

The frequent rallies and strikes eventually caused a reduction in worker productivity, thereby causing employers to suffer losses.

Meanwhile, the employers rejected Jacob's statement that they ignored the welfare of their workers.

Secretary general of the Indonesian Employers Association (Apindo) Djimanto said that most employers had carefully calculated the capacity of their companies to pay their workers, in accordance with their productivity.

Therefore, he called on all parties concerned not to be too quick to blame employers for unfair worker compensation packages or for treating workers unfairly, he said.

"We are ready to calculate the compensation packages (with those parties) in a rational way. They should not simply blow the issue out of proportion by using political or populist methods," Djimanto told The Jakarta Post.

Djimanto said that the issue should be carefully analyzed by means of a cost-benefit analysis, since failure to do so would cause losses on both sides.

"Should companies accept all workers' demands, they would face soaring labor costs.

"If the increase in labor costs were unbearable, employers would eventually be driven out of business. That would create more unemployment," he said, adding that in such a situation, both sides would eventually lose out.