Arientha Primanita, Jakarta – The Jakarta administration on Friday said the increase in the new minimum wage for next year would be 15.8 percent, a move that labor unions lambasted as too low and employers as too high.

It would increase the monthly minimum wage in the city from Rp 1.12 million this year to Rp 1.29 million ($143) in 2011. It is more than the 7.1 percent recommended by the city's wage council, which comprises representatives of the administration, workers' unions, employers' associations and experts.

But it also falls short of demands by workers' unions that the increase be based on the Reasonable Living Cost Index (KHL), which for Jakarta is pegged at Rp 1. 4 million a month this year.

Deded Sukendar, head of the Jakarta Manpower and Transmigration Agency, said the increase would take effect on Jan. 1 next year and would apply to unmarried workers.

"That figure represents the main salary, but most employers will also provide transportation and meal allowances, so the take-home pay will likely be higher than that," he said.

He added companies that could not afford to pay their employees based on the new figure could apply for an exemption from the administration.

"But we'd need to really examine whether such companies are really financially incapable of complying," Deded said, adding not all companies would be considered for exemption. "They'd have to submit their financial audits for us to study."

He also said that with the 15.8 percent increase, the minimum wage in Jakarta would for the first time in two years surpass those in the satellite cities of Depok, Bogor and Bekasi. Jakarta's minimum wage has been less than those in the surrounding areas since 2009.

Mas Muanam, a wage council member representing a labor union, said the workers' demand for the 2011 minimum wage to be based on the KHL had been dismissed in favor of the employers' interests.

"During discussions, the wage council concluded that if the minimum wage was raised to the same level as the KHL, then most companies would go bankrupt," he said. He added that in a minor concession, the council had agreed that workers would be eligible for a salary increase after 12 months of employment.

Muanam also said the wage council would next year carry out spot checks at companies to ensure compliance with the new minimum wage. "Employers who fail to pay their workers at least the stipulated minimum wage can be charged under the 2003 Manpower Law," he said, adding the violation carried a maximum prison sentence of four years and fines of up to Rp 400 million.

But Sarman Simanjorang, deputy chairman of the Jakarta chapter of the Indonesian Chamber of Commerce and Industry (Kadin), said the increase did not seem to take into account current economic conditions. "The increase must be based on economic conditions and inflation," Sarman said. "If inflation in 2011 is predicted to be 5.7 percent, then a 15 percent increase is too much."

He said he was concerned the new wage would have a negative impact on businesses, particularly big ones like those in the automotive industry.

Nita Yudi, another Kadin deputy head, said the increase would push companies to find ways to boost efficiency, like reducing electricity consumption. But she warned that "if the companies can afford to, they may have to lay off some of their work force."