Dion Bisara & Muhamad Al Azhari – With tens of thousands of workers across the country set use May Day protests today to demand better wages, business leaders and economists say any rise in pay must be matched by an improvement in productivity.
Citing increasing living costs, labor unions are rallying for higher pay and a halt to some outsourcing practices. Data from the International Labor Organization shows that Indonesian workers are among the region's lowest paid.
While ILO data for 2009 showed the average monthly wage to be at $432 in China, $282.80 in Thailand and $685.70 in Malaysia, the Central Statistics Agency (BPS) placed Indonesia's figure at $127.80. That had risen to $135.80 by 2011.
"We oppose the low wage policy in Indonesia," Said Iqbal, president of the Indonesian Trade Union Confederation (KSPI), said in Jakarta on Monday.
Iqbal said that as many as 100,000 workers from manufacturing plants in Greater Jakarta – including in Tangerang, Bekasi, Bogor and Depok – would take part in a May Day march in the capital.
The rally will pass the National Monument (Monas), the Hotel Indonesia traffic circle, Tugu Tani, Salemba and Tugu Proklamasi, all in Central Jakarta, he said. Rallies will also take place in other major Indonesian cities, he added.
Businesspeople and economists said that they agreed with the need to increase wages, but that productivity also needed to improve.
Indonesia's worker productivity lags some of its neighboring nations. ILO data from 2010 show that Indonesia's labor productivity – measured in annual gross domestic product per working person – was $10,587, compared to $25,058 in Malaysia and $12,593 in China. US workers had the highest productivity at $68,126 per person.
Kodrat Wibowo, an economist from Padjajaran University in Bandung, said labor productivity in Indonesia lags behinds its peers in the region.
"I don't think that is because of a lack of education or lack of training. That issue has been here for decades," Kodrat said, blaming the low productivity on "poor work ethics". "We are quick and unified to demonstrate but not to work," he added.
A lack of infrastructure, he said, such as poor roads and transportation, also contributed to low labor productivity. "A business cannot boost its production when it faces bottlenecks on roads or at ports," he said, adding that this in turn, would create indifference among workers.
Singapore Prime Minister Lee Hsien Loong voiced the same concerns on Monday in his annual May Day message. Singaporean companies and workers must improve their skills to increase productivity and help expand the economy, the Associated Press reported him as saying.
Harry Warganegara, secretary general of the Indonesian Association of Young Entrepeneurs (Hipmi), said he hoped workers could see the bigger picture.
Businesses, he said, face high "miscellaneous" costs – a reference to illegal payments – that eat into profit and therefore prevent adequate pay increases. "It's not like we are refraining from paying higher wages," he told the Jakarta Globe on Monday. "I can understand that living costs are higher now."
Harry said the lack of infrastructure coupled with rampant corruption had increased operating costs. "Such things have eaten up the money that is supposed to go to their wages," Harry said. "If workers keep demanding a rise in wages, they might scare off investors who would be better off investing in Vietnam, Laos or Burma."