The invisible costs

The invisible costs

Rosidah, 30, a female worker at a shoe factory in Bogor, West
Java, reportedly had a miscarriage last month after the company's
executives punished her by making her stand in the hot sun in the
factory compound because she had been absent from work several
days earlier. The worker, who was then two months pregnant, was
further humiliated by being required to hold up a placard bearing
the words, "I skipped work yesterday."

The incident was reported to the police by her fellow workers
who claimed that such unorthodox means of punishment had been
enforced by the company for some time.

At first, Rosidah herself was reluctant to file a complaint
for fear of losing her job. The four fellow workers, who had
reported Rosidah's case, were later sacked by the company without
any severance pay. The management of the company has refused to
comment on the matter.

We bring up the story of this incident in light of the new
mandatory minimum wage scheme to be enforced by the government in
April as an illustration of the state of our labor situation in
general. The new ruling, decreed by Minister of Manpower Abdul
Latief last week, will raise minimum wage levels by between 10
percent and 35 percent in most of the provinces. Thus, in Jakarta
for example, the minimum daily wage will be raised from Rp 3,800
to Rp 4,600.

Many businessmen were quick to grumble that the new system
will surely raise production costs which, they claim, will
subsequently cut Indonesia's competitiveness as a country
offering cheap labor to investors. Many workers have responded
just as skeptically. They complain that the hikes are barely
sufficient to cover the impact of the runaway cost of living on
their meager incomes.

While the difficult situation and poor conditions of the
majority of our workers prevails, and the controversy over the
new minimum wage scheme continues, an interesting fact suddenly
has come to the light. Several businessmen acknowledged that they
are unable to raise their workers' wages because they have to
spend between 20 percent to 30 percent of the cost of running
their businesses to pay illegal fees and bribes. This is really
quite a large proportion of production costs as compared to only
seven percent for paying for workers' salaries and allowances.

What those businessmen revealed is actually not news. Anybody
who has done business in this country knows how rampant the
corruption here is. Any license or permit has to pass through
innumerable hands, with each and every one demanding a certain
amount of "levies" for their own pockets. Sadly speaking, many
disregard this common practice of invisible costs as an
unimportant petty offense and blame the meager salaries of the
civil servants as an excuse.

But, we believe that the proportion of these invisible costs
has reached a dangerous level. Things have gotten entirely out of
hand, resulting in a high cost economy and causing nationwide
moral decay. This practice has caused the world to view Indonesia
as a corruption riddled country, a liability in the eyes of many
foreign investors.

But, as is the case with many "customs" in this country, it is
always difficult to prove the existence of these invisible costs.
Government officials always insist that there should be
sufficient concrete evidence before any case can be brought to
court. Although of late some businessmen have said that they are
ready to disclose documented cases of bribery, provided the
government guarantees the anonymity of the victims, we are
somewhat skeptical that any of this will make it into legal
processing.

Because anyone can easily see that what we lack is a real
political will to eradicate this societal disease. And since this
problem is structural in nature and so widespread is the disease,
one cannot be blamed for assuming that only some drastic measures
taken by somebody at the top will prove to be effective therapy.

Yet, it does not mean that we all should lose hope. There are
sufficient indications that the government, spearheaded by
Minister Latief, who has the full support of President Soeharto,
is really sincere in striving to improve our workers' standards
of living. Our workforce deserves to share the development pie.

Who knows, maybe what is next in line will be a program to
eradicate the bureaucratic red tape and invisible costs in
support of our pledge to form a free trade area in the Asia
Pacific region by the year of 2020. With ever fiercer competition
from countries like China, Vietnam and India for the funds of
foreign investors, we have no other choice but to combat the
causes of our high cost economy.

Unfortunately, in the meantime, millions of workers like
Rosidah can do nothing but wait and hope.