Indra Harsaputra, Surabaya – Household goods manufacturing company PT Maspion has been hit by the double blow of cheaper products from China and Vietnam, and a massive strike by workers demanding higher pay.
With cheap products from China and Vietnam flooding into the domestic market, Maspion, which has 51 factories in East Java that employ a total of 18,000 people, is struggling to maintain its competitive edge.
Many consumers are turning to imported products because they are generally cheaper. This is combined with a slump in industrial production at the company following the domestic fuel price increases.
And late last month, thousands of Maspion workers took to the streets of Surabaya, forcing management to give in to their demand for more pay. The strike placed the chairman of the East Java legislative council's public welfare commission, Saleh Mukadar, in a difficult position.
Saleh had the striking workers demanding Maspion's management be required to pay them the revised minimum monthly wage of Rp 685,500 (US$74.10) for Surabaya, from the previous minimum wage of Rp 655,000. At the same time, Alim Markus, the president of Maspion, was protesting that if the company was required to increase salaries, it would be forced to shut down some of its factories.
Saleh quoted Alim as saying that if the workers' demand for a raise was approved, Maspion would have to close two of its factories in East Java, resulting in massive layoffs.
"Even if the workers had not gone on strike and halted production, we are already suffering loses. It's very difficult to meet workers' demand," Alim said as quoted by Saleh.
Saleh has received similar complaints from other businesspeople affiliated with the Indonesian Employers Association (Apindo) on the revised city minimum wage.
Apindo has filed a lawsuit with the Surabaya State Administrative High Court against the East Java gubernatorial decree on the revised minimum wage.
It was on the basis of this lawsuit the management of Maspion finally gave in to the workers' demand and raised their wages by Rp 30,000 per month, on the hope the court would throw out the revised wage and the company could roll back salaries.
A hand-written order on the raises was issued Feb. 27, signed by Alim Markus, who is also chairman of the East Java branch of Apindo, and Andi Tjandra, Maspion's human resources director, as well as the chairman and vice chairman of the legislative council's public welfare commission.
However, Apindo's lawsuit against the gubernatorial decree was rejected by the court March 3. The court found that the deliberation of the revised minimum wage was legal and Apindo had no grounds to call for its repeal.
After the court's decision, workers began demanding Rp 711,000 a month. Maspion has refused this demand, saying it is above the city minimum wage and the fuel price increases had left the company unable to pay workers any more.
Workers have returned to work due to dismissal threats if they continued their protests.
"President Susilo should open his eyes because all of this was the consequence of the increase in fuel prices, not to mention the planned increase in electricity rates. I don't know when this madness will end," Saleh said.