JG: ‘Execs Slam Higher Wage Demands’

From The Jakarta Globe,* employers react to proposed increases in the minimum wage:

Erwin Aksa, the Indonesian Chamber of Commerce and Industry’s (Kadin) deputy chairman for small and medium enterprises, said the proposal for an increase in labor wages should be made in such a way that would not disturb companies while accommodating the needs and interests of employees.

“If too much of a burden is placed on operational costs expansion will be hurt. Demanding a 50 percent increase, I think, it is too high,” he said.

“There is a formula already, using inflation as the base and the cost of living in a province,” said Erwin who is also the chief executive at Bosowa Corporindo, a Makassar-based conglomerate with diversified businesses, including automotive, cement, energy and property.

Ade Sudrajad, the chairman of the Indonesia Textile Association (API), echoed Erwin’s concern, saying the labor unions’ recent proposal would have a devastating impact on the nation’s industries especially the textile product sector.

And the union response, from Said Iqbal (Confederation of Indonesian Workers Unions [KSPI]) and Nining Elitos (Confederation of Congress of Indonesia Unions Alliance [KASBI]):

The increase in the subsidized fuel price is expected to accelerate inflation and in turn hurt the purchasing power of many Indonesian laborers whose salaries are lower than the average worker in regional markets such as in Malaysia, Thailand and other Southeast Asian nations, Nining said.

Bank Indonesia has forecast inflation to reach 7.5 percent following last month’s subsidized fuel price increase. Inflation quickened in June to 5.90 percent from 5.47 percent in May.

Said was persistent with the unions’ demand. “Renting house costs, transportation costs, the price of food and beverages have increased sharply. Laborers do not receive the government’s temporary direct cash assistance program (BLSM),” Said told Investor Daily. “That makes the laborers vulnerable to falling below the poverty line.”

Nining agreed that the rise in wages must correlate with rising productivity, but she called employers to also consider the vital role of laborers play as the backbone to their companies’ operations.

*Erratum: Previous version of this post said story came from The Jakarta Post.


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