Time to introduce wage scale system, economist says

Time to introduce wage scale system, economist says

JAKARTA (JP): Companies in Indonesia should establish a wage
scale and enforce it consistently to win workers' loyalty, a
Singaporean labor expert says.

David Chew, an economics professor at the National University
of Singapore, said yesterday that companies should stop using the
official minimum wage level as a yardstick and introduce their
own wage scales.

Chew, who is an expert at the International Labor
Organization, was responding to a question during a seminar on
wages organized by the Ministry of Manpower.

Workers who continue to be paid below the minimum wage after
many years of service are more likely to change jobs when
opportunity knocks, he said.

One seminar participant explained that the minimum wage level
in Indonesia was often understood to be the lowest salary that
could be given to a skilled worker. "This means that unskilled
workers, no matter how long they have worked, will receive
salaries lower than the minimum wage," he astutely pointed out.

Chew suspected that such a situation had been created because
the market mechanisms of the labor market are not working
properly. He added, however, his belief that the situation in
Indonesia was not as bleak as that portrayed by the questioner.

He warned that in the absence of proper enforcement of a wage
scale system, a company will face difficulties in retaining its
workers because they are likely to become dissatisfied, de-
motivated and less productive.

"As a result of the wage scale, the worker should be getting a
higher salary. The company should not continue to pay the worker
at the bottom of the scale," he said.

The two-day seminar is the third in a seven-part conference
organized by the Ministry of Manpower to examine the overall
manpower situation in Indonesia. The first and second tabled the
problems of unemployment and industrial relations.

There have been suggestions that Indonesia strengthen the
existing national wage council which should look beyond simply
setting the minimum wage levels in different regions and
professions.

Coordinating Minister for Industry and Trade Hartarto, in his
speech read by aide Djermani Sandjaja, stressed the need for
management and workers to work together as partners.

"If a company earns a large profit, it is only natural that
the workers receive their fair share," Djermani said.

A worker's wage should be seen as remuneration to meet the
basic needs of the workers and their families and not as a
component of a company's production costs, he added.

Chew explained that several criteria should be used to set the
minimum wage level.
Protection

It should meet the workers' physical requirements and provide
some kind protection from imperfections of the labor market, he
said "The two will not cause a conflict because, as a safety net,
the minimum wage would be consistent with economic growth."

Chew conceded that it may be easy to attract a worker who is
willing to work for low pay. "But will you get a motivated worker
when, after 10 years, he sees other workers in other companies
making more money?" he asked.

"So maybe you can get a worker --- because of your under-
employment problem -- but you won't get one that is committed,
which is important to the company," he added.

However, he pointed out, any such decision would hearken back
to the managers' ethics and morality.

"These, besides economic considerations, are factors which
should be used to determine the minimum level of satisfying the
workers' physical requirements.

The government raised the minimum wage levels throughout
Indonesia in January in the hope of bringing them closer to what
is considered the workers' minimum physical requirements. The
hikes, however, have met continued resistance from companies,
especially those operating outside Jakarta.

In the capital, the daily minimum wage level is Rp 3,800
($1.80). (pwn)