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.