Salim's garment executive says minimum wages too high

Salim's garment executive says minimum wages too high

By Maria Andi

JAKARTA (JP): An executive of the garment and textile division of the Salim Group says the new minimum wages set by the government are too high for the garment and footwear industries and some companies may be forced to cut back on their workforce, or even close down.

Jim T. Halim, coordinating director of the diverse textile division of the giant business group, said the problem particularly arises when it comes to paying workers overtime.

The two industries, he said, receive differing information on overtime.

Under the law, weekday overtime rates should be between 1.5 and 1.7 times higher than the normal wage, while weekend rates could be twice as much.

The government announced increases this month averaging 10 percent in the minimum wage levels across 25 of Indonesia's 27 provinces. The increases become effective on April 1. The minimum wage level in Jakarta will be increased to Rp 5,300 ($2.4) a day from Rp 4,600.

"Garment and shoe companies will find it hard to start the Rp 5,300 minimum wage unless the government makes exception to the overtime payment," Halim said.

Many garment and footwear companies barely survive with the current minimum wage levels, he said. With the new increase, some will be forced to retrench people, or worst still, close down altogether.

"With the high industrial costs, it is hard for the companies to be competitive in the international market," he said.

Minister of Manpower Abdul Latief, himself a successful businessman before joining the cabinet in 1993, on Monday said that there was no going back on the minimum wage question.

Latief, however, agreed that to make companies more competitive abroad there was a need to abolish some of the official charges currently levied on them. For his part, he said he will waive the fee for workers' insurance against accidents.

Halim argued that exception should be made for the garment and footwear industries, at least with regard to overtime.

Garment and footwear are sensitive businesses because of constant changes in fashion. "Market orders should be fulfilled on time, otherwise the products would no longer be in fashion and buyers cancel their orders," Halim said.

"The (overtime) policy has also scared away many foreign investors from entering the garment and shoe industries," he said, adding that Singapore, Thailand and South Korea do not have as restrictive policies on overtime payments as in Indonesia.

Halim said to overcome the problem, many companies have simply commissioned the jobs on a "wholesale" basis with workers, paying them on the basis of their productivity.

Rustam Aksam, the head of the Textile, Garment and Leather Union of the All-Indonesian Workers Union Federation, told The Jakarta Post that the overtime policy should be applied across the board, irrespective of the market condition.

"Workers should be paid more for doing overtime, which is not obligatory to them," Aksam said.

He dismissed Halim's argument that companies have difficulties because they are unable to afford overtime payments.

"Unstable garment and shoe factories were not competitive nor efficient in the first place. It has nothing to do with labor costs," he said.