Jakarta Workers Rally for 50% Minimum Wage Increase; Employers Say No

September 6, 2013 Leave a comment

Jakarta Workers Rally for 50% Minimum Wage Increase; Employers Say No

By SP/Edi Hardum, SP/Hotman Siregar, SP/Mikael Niman & Bayu Marhaenjati on 9:00 pm September 5, 2013.
Some 20,000 Greater Jakarta workers rallied on Thursday to demand a 50 percent increase in regional minimum wage for 2014. “We refuse the Presidential instruction that increasing the 2014 minimum wage would violate the 2003 law on manpower,” said Teguh Maianto of the All-Indonesian Workers Trade Union. The protestors, drawn from several union and labor groups, gathered at the Hotel Indonesia traffic circle, the State Palace, the Ministry of Manpower  and the Ministry of Health. The wage increase was necessary, Teguh said, because of increases in commodity and subsidized-fuel prices.The protesters also demanded no salary deductions for workers in the new social security plan to be implemented on January 1.

On August 29, the government issued a stipulation that the minimum wage should not grow at a rate that exceeded yearly inflation by 10 percent.

Indonesian minimum wage is set at the provincial and district level. Vice President Boediono urged local leaders to resist pressure to raise the minimum wage in the run-up to the 2014 election.

Said Iqbal, president of Confederation of Indonesian Workers Unions, said workers rejected the presidential decree because they believed it was derived from pressure the business lobby had applied on the government.

“They issued a decree, while the regional wage council had not conducted a Reasonable Living Cost Index survey and the governors had not set anything yet,” he said.
Low wages have meant low purchasing power and continued poverty,” he said. “We have to cut the circle of poverty.”

Employers said an increase in minimum wage to Rp 3.7 million, as the protestors demanded, would not be realistic and could threaten business and cause layoffs in the current economic climate.

“The depreciation of the rupiah really affects investment and consumption,” said Sarman Simajorang, the deputy chairman of the Jakarta branch of the Indonesian Chamber of Commerce. “The request to raise the minimum wage by 50 percent is very immoderate and only takes into account the interest of the workers, without looking at the business sector’s capabilities.”

Sarman said the 44 percent increase in 2013 forced companies to move outside Jakarta and fire staff. He said that falling demand would impact labor-intensive industries such as garment, shoe and textile production.

Muhaimin Iskandar, Minister of Manpower and Transmigration, said the putative increase was impossible for companies.

“Workers do not think if they push their request that many companies will close down,” said Chairman of Indonesia’s Employers Association Sofjan Wanandi. “If that’s what happens, there will be mass layoffs.”

During the protests, 12,000 police officers secured the streets and diverted traffic. Smaller protests also occurred in Bandung, Cinahi and Subang.

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