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Factory workers, businesses at odds in East Java

Source
Jakarta Post - February 9, 2006

Indra Harsaputra, Surabaya – Bending to pressure, the governor of East Java recently revised the monthly minimum wage, but the move failed to please either workers or businesspeople in the province.

With both sides unhappy, it is almost inevitable that more protests will be held in a province that has seen a number of violent labor actions in recent months.

The latest incident occurred in mid-January and involved thousands of workers from the province's main cities of Surabaya, Sidoarjo, Pasuruan, Malang, Gresik and Mojokerto. Clashes between security personnel and demonstrators left at least 11 people injured.

The owner of a footwear manufacturing company in Sidoarjo, Alianto Wibowo, saw the clash on television and was moved to attend a meeting of the Sidoarjo chapter of the Indonesian Employers Association to discuss the matter.

In December, the governor set the minimum monthly wage at Rp 632,775 (about US$64) for the 12 regencies and mayoralties in East Java. The minimum wage for the provincial capital Surabaya was set at Rp 655,500.

Workers denounced the minimum wage, which they said was not enough to meet their daily needs following the fuel price increases last October. They demanded a minimum wage of Rp 845,000. On Jan. 26, the governor raised the minimum wage to Rp 651,333, and Rp 685,500 for Surabaya.

Businesses in the province, already struggling since the fuel price increases, have watched with concern the protests calling for higher wages. Alianto has already implemented a number of efficiency measures at his company to help offset October's fuel price rises, including slashing company expenditures and the size of his workforce.

In 2004, the company employed 36 workers, but that number is now down to seven. With this skeleton staff, the company is able to produce 500 pairs of shoes a day, a far cry from its peak production of 1,500 pairs.

"Dismissing workers is the hardest choice to have to make, but what else could I do since production costs have increased drastically. Which is not to mention the number of buyers who have canceled orders," said Alianto.

The government's decision to raise fuel prices had a heavy impact on at least 15 of the 40 companies in the NGOro Industrial Persada complex in Sidoarjo, and within days of the increase many of the companies were already considering shifting their base of operations to other countries.

Of the 40 shoe manufacturers in Sidoarjo in 1998, only 22 remain, employing some 15,000 workers. Now Alianto and other businesspeople are dealing with demands from workers for higher wages.

And while the businesspeople consider any monthly wage above Rp 655,000 as overly burdensome, the workers say they will continue their protests until they receive a living wage. "We will continue the protests against the government until the workers' demands are met," promised Jamaluddin, secretary-general of the Surabaya Workers Forum.

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