According to the Jakarta Post, 1,000 workers protested outside the Surabaya District Court on Thursday over the lack of the enforcement of the new minimum wage. At stake is whether the province will see a 17% increase in the minimum wage in 2009, as decreed by the governor in October. APINDO, the Indonesian Employers Association, has filed a legal challenge to the measure and has encouraged employers to not pay the new minimum wage until there is a legal decision. This has led to a rampant deregard of the new minimum wage throughout the province, with the Surabaya Legal Aids Institute (LBH Surabaya) receiving over 50,000 complaints from underpaid workers, no doubt a fraction of the total number of cases, given the fear of reprisal that many workers face. The Konfederasi Serikat Pekerja Seluruh Indonesia (KSPSI) estimates 40% of employers in the province are not paying the new minimum wage. This leaves workers not only with a fear of the law being overturned, but also a fight over back-pay even if the law does stand.
Protests of provincial minimum wages have been in the news throughout the past year and it would interesting to take a look at the terrain of these provincial minimum wage campaigns more extensively. Politically, while unions may find some leverage opportunities with local governors, these types of campaigns could also be undermined by more powerful forces locally or nationally. In this case, its not only APINDO but the central government undermining the campaign by recommending the provinces adopt a minimum wage increase of 7%, equalling the inflation rate. One topic I haven’t seen brought up, at least in the Jakarta Post coverage, is wage competition between provinces, which could resemble the manufacturing wage disparities in the northern and southern United States and provide a potentially powerful talking point for the likes of APINDO. And if APINDO is successful in reversing the governor’s decision, would it set a precedent for the way minimum wage increases are decided in other regions? I expect we will hear more about this case in the coming months.