Workers' share of revenues remain low

YOGYAKARTA (JP): Workers' share of national revenue remains low although the government has set the level of minimum wages, economist Kwik Kian Gie said yesterday.

In a seminar titled Humane Economic Development, Kwik said company managers' concern that higher wages would result in bankruptcy have no sound rationale.

Some companies fear that raising wages will result in automation, which could trigger higher unemployment.

"This 'master' mentality is groundless because it believes that if workers' wages are raised then income and purchasing power will rise," he said.

The one day seminar at Muhammadiyah University was opened by Muhammadiyah chairman Amien Rais. It also featured local economist Revrisond Baswir of Gadjah Mada University.

Kwik said the large number of workers would increase their purchasing power if they were well-paid. This would create a positive ripple effect toward a greater need for goods and services, an expansion of factory space, more investment and an improved economy.

He said one example was high workers' wages in developed countries, which experienced increased economic growth.

Kwik said overly high wages would result in automation and trigger unemployment like what happened to West European workers in the 1970's.

"But in a country where national revenues for workers are low, increases in their pay would stimulate the economy," he said. He added that business executives would initially be reluctant to share their large profits with workers.

Kwik said Indonesian workers are yet to receive their due respect as they have been prevented from forming labor unions and the leader of the independent Prosperous Labor Union Muchtar Pakpahan may be jailed for subversion.

He said the Ministry of Cooperatives and the House of Representatives are yet to understand the noble obligations placed on them to help workers.

"The budget allocated by the Ministry of Cooperatives and small business development for programs aimed at improving workers' prosperity is meaningless," he said.

Meanwhile, Amien Rais said the political elite in developing countries, including Indonesia, are servants of multinational and transnational companies.

Amien, chairman of the 28-million member Muhammadiyah Islamic organization, said these servants or kompradors ignore the public's interests as a result of their alliance with multinationals.

"Intellectuals must prioritize viable alternatives to prevent the public from being increasingly pushed aside by the global economy's power plays prompted by multinationals and transnationals," he said. (23/01)