Wage research council needs more 'teeth'

JAKARTA (JP): The National Wage Research Council (DPPN) says it should be given more power to formulate as well as enforce its recommendations.

DPPN Chairman A.S. Ruky told a seminar on the wage system this past Friday that the council's role should be expanded beyond simply that of a government think-tank to also anticipate problems in connection with wages as well as formulate policy.

The council, which was established in 1969 by presidential decree, should be allowed to function as more than a research center, Ruky said.

"By making DPPN a wage council, for example, it could have more room to formulate a national wage system, control its implementation and formulate wage scales for companies," he said. "The body could also set sectoral and national minimum wages, making it an independent and autonomous body."

The council now consists of 31 members comprising representatives from employers, the All Indonesian Workers Union (SPSI), universities and the government.

Ruky, who is an executive of PT Semen Cibinong, a private cement producer, acknowledged that many council members have been inactive. "Only 10 members, including two from SPSI, are actively involved."

Ruky said that the main challenges facing the council include raising wage levels in Indonesia, speeding up wage increases for those at the bottom of the wage scales, and narrowing the gap between the highest and lowest paid workers in a company, noting that in some companies, this ratio reaches 50:1.

Ruky pointed out that over the years "things had gone wrong" with the way the council dispensed with its duties.

The position of DPPN chairman had been downgraded. It was originally held by the Ministry of Manpower before being delegated to a director general. "And now it is handed to me -- a person completely unattached to the ministry."

Matthias Aroef, a panelist from the National Productivity Council of the Ministry of Labor, said DPPN should be independent, and its members more professional. "It doesn't even have a budget for research so the members practically work on a volunteer basis."

Matthias pointed out that DPPN's current structural formation gives it very little access to policy-makers. "It would be better if the council was chaired by the minister. This way, it would have quick access to the high-level policy-makers."

Comparison

As a comparison, David Chew from the National University of Singapore, explained that the Singapore National Wage Council is comprised of government officials and institution leaders from the highest levels, including the ministers of labor and finance and trade union leaders. Thus the body has direct access to policy-makers and the head of the state.

The seminar, which was held jointly by the Ministry of Labor, DPPN and the Center for Information and Development Studies was the third in a seven-part conference to examine the overall manpower situation in Indonesia.

Setting a minimum wage level has lately become a hotly debated issue as company managers often disagree about what that level should be.

Soeharsono Sagir, an economist from Padjadjaran University in Bandung and a former aide to the Minister of Manpower, commented during the seminar that "the official regional minimum wage currently implemented throughout the country is irrational and without a clear scientific basis."

He suspected that this has occurred because the government failed to carry out sufficient research before imposing the new minimum wage levels. "Instead they only listened to unreliable information from local labor councils."

Soeharsono reminded that according to the regulations, the new daily wages in Jakarta, for example, became Rp 3,800 (US$1.80) and in Kalimantan, Rp 3,250.

"This is irrational, because the daily cost of living in Kalimantan, Rp 4,248 for an unmarried worker, is far higher than that in Jakarta, which is Rp 3,856," he sited. (pwn)