Category Archives: Minimum Wage

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.


Whose Afraid Of A Minimum Wage?

From this Jakarta Globe article on minimum wage increases in Indonesia:

Heriyanto Irawan, an executive at Deutsche Bank, said he believed the minimum wage rises across the country may actually stimulate investment because higher wages lead to more consumption.

“The positive consequences from the wage increase is an increase in consumption,” Heriyanto said in a meeting with reporters on Wednesday in Jakarta.

He said that on average an increase of 5 percent of sales turnover at a company should be enough to absorb the increase in labor costs.

[Update]: Or, from the Financial Times

But in spite of loud complaints from corporates, experts say issues like wage hikes are unlikely to dampen investor enthusiasm for south-east Asia’s largest economy. Indeed, FDI surged 22 per cent year on year to an all-time high of $5.9bn in the third quarter, even as GDP growth slowed slightly from 6.4 per cent to 6.2 per cent.

HSBC said in a report:  [Foreign direct investment] is drawn to Indonesia for reasons beyond cheap labour. Its population of 240mn represents not just a resource, but also a significant market. Rising incomes – helped along by minimum wage hikes – only raises its allure as the latter… As it stands, consumption expenditure has already increasingly been growing at above trend so far this year; the impulse from a larger than usual minimum wage hike next year could fuel an even faster rise.

To a degree, the government has bowed to corporate pressure by introducing an exemption from the minimum wage hike for SMEs and MNCs that cannot afford it (subject to an external audit). But most experts and industry members are bracing for similar measures to be pushed through next year.


HOSTUM Demonstration Takes Over Jakarta Streets

Thousands of members from various labor unions join a rally along Jalan M. H. Thamrin in Central Jakarta on Thursday to urge the government to improve wages and review its outsourcing policy. (Antara Photo/Ujang Zaelani)

From The Jakarta Post:

Massive labor protests involving tens of thousands of workers paralyzed parts of Jakarta on Thursday as demonstrators demanded a higher minimum wage and an end to unfair labor practices.

Thousands of protestors gathered at the Hotel Indonesia roundabout before marching to Merdeka Palace in Central Jakarta, choking traffic along Sudirman and Thamrin avenues, as well as Jalan Abdul Muis, Jalan Medan Merdeka Barat and Jalan Medan Merdeka Utara.

Other workers protested in front of the legislative complex, the Manpower and Transmigration Ministry, the Attorney General’s Office and the Health Ministry, forcing officials to detour traffic.

July 12: Day of Action To Reject Outsourcing & Low Wages

Konfederasi Serikat Pekerja Indonesia (KSPI) has declared July 12 a day of action to protest outsourcing and low wages.  You can read more about the action below:

Today, Tuesday 10th of July 2012, Konfederasi Serikat Pekerja Indonesia (KSPI – Confederation of Indonesia Trade Unions) through its press release has been calling for a national action on 12th July at three locations: the Coordination Ministry for Economic Affairs, State Palace, and Ministry of Manpower and Transmigration. The Confederation also calls for a similar action to be held simultaneously in 15 provinces and districts/cities across the country.  They call this national action movement HOSTUM (Hapus Outsourcing dan Tolak Upah Murah—stop outsourcing, fight against low wage). The HOSTUM will be the KSPI’s campaign agenda throughout this 2012.

This agenda is so important. KSPI said that fighting for better wage for all workers around the world has been the way for improving living standard of themselves and their family. In the other side, better wage is one of nation welfare measures in which the higher the people purchasing power the higher the economy will be. Decree of Manpower and Transmigration Ministry No. 17/2005 that has been a reference for a decent living needs (kebutuhan hidup layak—KHL) is no longer feasible, particularly its 46 components of a living needs and article on phasing-grade which results in even a single worker has to be “in debt” to meet her/his living needs.

Revision made by National Wage Council (Depenas) only recommends 4 additional components, which are: socks, belt, ironing, and deodorant. Therefore, KSPI through HOSTUM firmly rejects the recommendation because:

  1. Results of Depenas’ research is invalid and academically flaw because the research takes only 3,000 respondents out of total 30 million workers or 0.01% for its sample. Worsen, only 726 (24%) of the sample is utilized and the research is not carried out in industry-density areas such as Batam, Tangerang, Bekasi, Jakarta Timur, Jakarta Utara, Kerawang, and Sidoarjo.
  2. Indonesia is a country with rank of 16th in terms of world GDP (US$ 840 billion or equal to Rp 7,560 trillion) in 2011. Its GDP per capita is US$ 3,600s/people/year in 2011 and in 2012 and 2013 the number is targeted to be US$ 900 billion and US$ 1 trillion. However, workers of this country only earn their wage worth to US$ 120/month, a small figure compared to other ASEAN counterparts: Philippine US$ 250/mothn, Malaysia US$ 350/month, Singapore US$ 450/month, Brunei US$ 500/month.

Therefore, addressing both the unreasonable revision and the continuation of “Low Wage Policy”, KSPI takes a stand as follow:

  1. Demanding Coordinating Ministry for Economy Affairs and Ministry of Manpower and Transmigration to change Ministerial Decree  No. 17/2005, particularly to change its living needs components from 46 to 86 or 122 which is based on survey conducted by AKATIGA, SPN and Gartek KSBSI.
  2. Urging Ministry of Manpower and Transmigration to issue the revised decree on July 2012 as its promise before the House of Representatives and in print and electronic media. Fulfillment of the promise will prevent the blockage of toll-road .

For further information, please contact President : Said Iqbal (08158235479) or General Secretrary Muhamad Rusdi (081807700570)

Translated by Indah Budiarti

SBY On Recent Labor Unrest

From The Jakarta Post:

“Moral-wise, labor wages should be appropriate to meet the sense of justice,” Yudhoyono told journalists during an impromptu press conference at the Presidential Office on Wednesday.

“If our economy and business world continues to grow, then labor wages should go up in line with that growths,” he said.  The President also said that all local administrations at the regency and city levels should take a share of responsibility in handling disputes concerning labor’s minimum wages in several regions.

“The tri-partite regional wage council [in each region], which consist of representatives from the local administration, businesspeople and labor unions, must be able to address the issue properly. The council knows the life costs in regions, thus, they should know how much the minimum wage in each region should be,” Yudhoyono said.

“Don’t let the disputes be ridden by other interests. I hope this matter is free from any kind of political interests,” he went on.

Bekasi Workers Win Minimum Wage Victory In The Streets

Last week workers in Bekasi took to the streets, blocking the Jakarta-Cikampek toll road in protest of a court decision that overturned an increase in the district’s minimum wage.  The Governor’s decree would have increased the minimum monthly wage in Bekasi district from Rp 1. 29 million to Rp 1.49 million ($144 to $167).  It appears that the protests will force the court to annul its own ruling and allow the minimum wage increase to go through.

Sulistri, a leader from the Confederation of Indonesian Prosperous Labor Union (SBSI), gave her take on the larger implications of the protests:

The rallies, staged by workers demanding increased wages, confirmed how communications were lacking between employers and workers, said Sulistri, the vice president of the Confederation of Indonesian Prosperous Labor Union (SBSI).

She also said that local administrations must be more proactive and responsive toward both parties, because in most cases they would act as mediators. “And, of course, it will inspire workers in other places to fight for their rights. Workers will see that taking their protest to street with huge numbers is an effective way to be heard,” she said.

While in another article, Timbul Siregar of the Indonesian Workers Association (OPSI) says it is part of a larger trend:

Timbul Siregar, chairman of the Indonesian Workers Association (OPSI), said on Sunday that workers were beginning to realize that radical organized protests were the key to accomplishing their objectives.

“Protesting in front of the mayor’s office or the State Palace is a thing of the past,” he said. “Workers have learned that the way to be heard is to shut down the country’s economic vein.”

Only 8 of 33 Provinces Require Living Wage

According to a recent announcement by the Ministry of Manpower and Transmigration, only 8 of Indonesia’s 33 provinces have provincial minimum wages that fulfill the requirements for a “living wage.”  Those provinces are North Sulawesi, North Sumatera, South Kalimantan, Central Kalimantan, South Sulawesi, Bengkulu, DI Yogyakarta and Jambi.

The Minister of Manpower and Transmigration, Muhaimin Iskandar, suggested that wages that provide a living wage could be negotiated between unions and employers.  He also suggested that the provincial minimum wages should be seen as a social safety net providing a floor for wages and not as a benchmark for industry wages, which is still often the case in Indonesia.