Lenny Tristia Tambun – The Jakarta Wage Council decided late on Wednesday night to recommend a massive 44 percent increase in next year's minimum wage, much to the dismay of business representatives.
If approved, this would mean Jakarta workers should next year receive no less than Rp 2,216,243 ($230) per month.
"The calculation of the 2013 minimum wage was based on the worker living standard, regional living standard, Indonesia's projected economic growth in 2013, projected inflation rate and Reasonable Living Cost Index," said Dedet Sukendar, the head of the Jakarta Wage Council and also the head of Jakarta's Manpower and Transmigration Agency.
The amount is higher than the Reasonable Living Cost Index (KHL) in Jakarta that was recently set at Rp 1,978,789 – 30 percent higher than the 2012 benchmark of Rp 1,497,838 – but Dedet said the proposed figure was deemed the best for both employers and workers.
Workers representatives opened the meeting demanding a minimum wage of Rp 2.79 million per month, but later lowered this to Rp 2,216,243, which the Wage Council agreed to.
This final figure is just slightly higher than the Rp 2,176,667 proposed by government representatives, arrived at with the assumption of an annual economic growth rate of 6.8 percent and inflation at 4 percent.
Business representatives, on the other hand, wanted the minimum wage at Rp 1,978,789, equivalent to the KHL. The proposed minimum wage would be adopted once Jakarta Governor Joko Widodo approves it.
"Thank God," M. Toha, secretary general of Jakarta Worker Forum, said after the meeting. "Entering the Islamic New Year, we get the big prize – the minimum wage is higher by 44 percent."
But employers maintained their objection and refused to sign the decision, saying the government had conspired with the workers. Representatives from the Indonesian Employers Association (Apindo) and the Jakarta Chamber of Commerce and Industry (Kadin) walked out of the meeting.
"Apindo and Kadin do not acknowledge the decision of the Wage Council shown by our walking out of the meeting," said Bambang Adam, a representative from Apindo. Bambang said that if the governor approved the proposed wage, they would resort to legal options to challenge it.
Sarman Simanjorang, chairman of the Indonesian Indigenous Entrepreneurs Association (Hippi), said the proposed amount was not arrived at through the proper process set out by the government to determine the minimum wage.
"It's strange that the workers who previously insisted on a minimum wage of Rp 2.79 million in the end only demanded an amount that's two percent higher than the amount proposed by the government," Sarman said on Thursday.
"[The meeting] was fully loaded with drama and we, the employers, were abused. Why waste energy in that meeting if the minimum wage had already been set since the beginning."