Majority of Companies in Malang Defy New Minimum Wage

According to The Jakarta Post, the Malang Manpower and Transmigration Agency is estimating that around 60% of the companies in the regency are not paying the new 2009 minimum wage, a rate even higher than the 40% the Konfederasi Serikat Pekerja Seluruh Indonesia (KSPSI) previously estimated for East Java as a whole.  Companies can apply for exceptions if they can’t afford to pay the new wage, but few are bothering with this step.  Rather they are simply not paying the new minimum wage and hoping that it will be overturned in court, a strategy advocated by APINDO (The Indonesian Employers’ Association).

The regency’s head of Manpower and Transmigration gives an uninspiring description of process by which the new minimum wage could be enforced:

When asked whether the hundreds of violating companies would be punished, Jaka [Malang Manpower and Transmigration Agency head] said it was likely, but given the current economic situation, he said he preferred not to enforce stiff sanctions.  He added violating companies would not be directly punished, but would be summoned beforehand. Workers would also be invited to sit together and discuss the salaries they would receive.

“The government is responsible for providing guidance, to prevent layoffs. We have to be engaged in such discussions to prevent layoffs, on the grounds that the companies cannot afford to pay workers’ salaries,” he said.  Jaka added the employers could be considered in violation of the law, but before taking measures, three warnings must be issued as part of the guidance steps.

“The aim of law enforcement is to implement the law, but there are other objectives, such as counseling through dialogue to seek a solution so as not to implement stiff penalties, such as enforcing punishments immediately upon violation,” he said.

Given the various governmental players involved (a previous governor’s decree, the courts, and the Manpower and Transmigration Agency), along with the usual labor-capital interests, the outcome of this case could be an interesting test of where the power lies among these groups.

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2 responses to “Majority of Companies in Malang Defy New Minimum Wage

  1. Pingback: FSPSI: Over 50% of Firms In Tangerang Violate Minimum Wage « Working Indonesia

  2. Pingback: Get ‘Em Next Year « Working Indonesia

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