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Poverty soars as wage rise refused

Source
Sydney Morning Herald - April 1, 1998

Louise Williams, Jakarta – Indonesian workers have lost their bid for a minimum wage rise, despite record inflation, as business closures force millions out of work and back into poverty.

The Manpower Minister, Mr Theo Sambuaga, was quoted yesterday as saying there would be no increases in minimum wages, which workers complain no longer cover even the most basic needs due to spiralling food prices.

The Jakarta Post newspaper said Mr Sambuaga promised to review the decision when the economy recovers, but most economists predict that Indonesia is facing at least two years of economic problems.

Government officials and the International Monetary Fund said they were optimistic a new agreement would be announced "within days" which would modify the conditions of a $A63 billion bailout for the second time.

New unemployment figures released this month showed unemployment has doubled to 8.7 million people, and another 18.4 million are underemployed. This means more than 30 per cent of the entire workforce does not have adequate work.

In the past workers have enjoyed an annual increase to keep minimum wages within a range which covers 92 per cent of the cost of basic needs, such as rice. But the same wage which last year bought 6.2 kilos of rice buys only 4.7 kilos today, despite Government food subsidies, and much less of other basics such as cooking oil and noodles, according to a recent study by the International Labour Organisation.

The current minimum wage for Jakarta is 172,500 rupiah a month, worth $A34.50, and less in most rural areas. Last year, before the rupiah's dramatic devaluation, the same wage was worth $A100.

The ILO estimated there are 10 million new poor in Indonesia due to the economic crisis, pushing the number in poverty up from 22.5 million in 1996 to 32.5 million in 1998 and wiping out years of progress in poverty alleviation.

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