Ridwan Max Sijabat and Andreas D. Arditya, Jakarta – The administrations of eight provinces home to a number of labor-intensive industries have agreed to raise monthly minimum provincial wages by as much as 17 percent, potentially harming business prospects.
The eight provinces are West Sumatra, Banten, South Kalimantan, Central Kalimantan, Maluku, Southeast Sulawesi, Central Sulawesi and West Papua.
Other provinces hosting a huge number of labor-intensive industries – West Java, East Java, North Sumatra, Jakarta, Batam in Riau Islands, Central Java, East Kalimantan and South Sulawesi – have yet to decide on their figures.
"The increase of up to 17 percent in minimum wages has yet to reach a level where a worker can cover their basic needs, despite a ministerial decree on minimum wages and the establishment of a ministerial task force," Manpower and Transmigration Ministry director general for industrial relations and social security affairs Myra Maria Hanartani said on Friday.
Of the eight provinces, Central Kalimantan intends to impose the highest increase of 17 percent from the current Rp 1,134,000 (US$148) per month to Rp 1,327,459 and West Papua saw the lowest increase of only 2.84 percent to Rp 1,450,000.
Myra said the reason why some provinces had yet to set their minimum wage levels was due to stalled negotiations between employers and labor unions.
"The central government wants to ensure regional leaders comply with the labor law by setting the minimum wage hikes in time so that they would take effect as of Jan. 1, 2012," said Myra.
Jakarta labor union leaders said workers would go on strike and stage a massive rally next week if the city board recommended a new minimum wage that was lower than had been demanded.
Jakarta Labor Forum spokesman Muhammad Rusdi said that starting Monday, thousands of blue collar workers would join a week-long strike and rally across the capital. "We will continue striking until the city increases wages for 2012 by 20 percent to Rp 1,529,150," Rusdi said, adding that he expected more than 85,000 workers would join the rally.
The strike would involve workers at the Nusantara Bonded Zone industrial estates in Cilincing, North Jakarta, Cakung and Pulogadung in East Jakarta; Tanjung Priok Seaport in North Jakarta; and the Transjakarta Bus Rapid Transit and commuter train network.
Rusdi said the labor forum, which he claimed represented at least 10 labor unions, was disappointed by the city administration's remuneration board decision to recommend the governor set next year's minimum wage at Rp 1,497,838.
Indonesia, Southeast Asia's largest economy, has for the past three years enjoyed new investments and orders for labor-intensive industries such as textiles, garments and footwear, as many foreign companies have relocated their plants from Vietnam and China following the steep increases in labor costs there.