Damar Harsanto, Jakarta – As an Idul Fitri 'gift' for low-paid workers in Jakarta, the Jakarta administration has increased the minimum wage to Rp 819,100 (about US$81) for 2006, an increase of 15 percent from the current Rp 711,843.
The increase, however, is much lower than the Rp 1,203,015 demanded by labor unions. The 15 percent increase granted by the administration is below the inflation rate between January and October this year of 15.65 percent.
"Please bear in mind that the minimum wage is the lowest that can be paid by businesses in the city. Hopefully, larger and stronger companies will pay slightly higher than the minimum wage," Jakarta Governor Sutiyoso told reporters at City Hall.
The minimum wage is only applied for workers whose working experience is less than one year.
Sutiyoso said that the new minimum wage was in line with the recommendation lodged by the tripartite Jakarta Wage Council comprising representatives from the associations of employers, labor unions and the Jakarta Manpower Agency.
Jakarta Manpower Agency head Ali Zubeir called on any ailing businesses that may find it difficult to pay the new minimum wage to immediately request a dispensation from the agency. "We have set a deadline for such companies to file their dispensation requests 10 days at the latest before the full implementation of the minimum wage," Ali said.
The new minimum wage will become effective on Jan. 1, 2006. According to Ali, companies requesting dispensation that employ more than 1,000 workers must agree to be audited by independent auditors. The companies must also shoulder the expense of the audit. "In addition, the request must be made in consultation with labor unions in the respective companies," he added.
The agency said there were about 3.5 million workers in 25,000 companies across the capital.
Secretary general of Association of Indonesian Retailers (Aperindo) Handaka Santosa said he could accept the increase in the minimum wage.
"We can understand that the increase is due to ballooning living costs of workers. The most important thing is how both parties, employers as well as workers, can work together to weather rising operational and production costs in order that businesses survive the crisis," Handaka told The Jakarta Post.
He also urged the administration to eradicate illegal fees imposed on companies.
Some employers said that the recent fuel price hikes have increased production costs at some enterprises, especially manufacturing industries in the city, by up to 15 percent.
The government has increased the price of premium fuel for industry by 21.8 percent to Rp 6,290 per liter. Diesel fuel rose by 12.14 percent from Rp 5,300 to Rp 6,000, while kerosene went up by 14.28 percent from Rp 5,600 to Rp 6,400.
Meanwhile, chairman of the Jakarta chapter of the Association for Workers (Aspek) Gibson Nababan acknowledged that the wage increase was below what they had demanded.
"It's the best we could do. But, we also urge the administration to help mediate between labor unions and employers in negotiations for the new provincial minimum wage for certain sectors, or UMS," Gibson said.
Labor unions have long demanded that the administration set higher minimum wages for specific sectors deemed to be healthy, like hotels, automotive industries and metal industries.