Jakarta – Under mounting pressure from workers, the House of Representatives demanded Tuesday the government revoke a joint ministerial decree limiting minimum wage rises, citing it could lead to conflict.
House Speaker Agung Laksono said legislators had agreed to demand the revocation of the decree because it would disadvantage workers and had incited harsh reactions nationwide.
"The country does not need such a decree as it has no benefit at all," he was quoted by Antara news agency as saying after a meeting with House faction leaders to discuss the issue.
"We should avoid things that could threaten the state's stability. We have witnessed increasing protests against the decree in many provinces," Agung added.
The decree was signed last month by four ministers – Manpower and Transmigration Minister Erman Suparno, Trade Minister Mari Elka Pangestu, Industry Minister Fahmi Idris and Home Affairs Minister Mardiyanto.
The government argued the decree was designed to empower the local economy against fallout from the global economic crisis and to anticipate ensuing mass layoffs.
The decree requires provincial governors not to impose wage rises exceeding the growth of the national economy. The decree also stipulates that monthly minimum wages are set by each company in a bipartite meeting of employers and workers, and fixed based on regional economic growth.
Existing regulations emphasize the role of local administrations in determining adjustments to the minimum wages, meaning firms are not at liberty to set the threshold based on their financial capabilities.
The decree also highlights the involvement of local administrations in supporting business sustainability by taking into account business capabilities, especially in the labor-intensive sector.
Labor unions across the country have protested the rally, citing that the government allowing employers to determine minimum wages would encourage unfair practices.
The decree was reportedly prompted by fears among business communities that certain local administrations were planning to increase their minimum wages by up to 30 percent.
The Bekasi administration planned to increase its minimum wage by 30 percent next year, while the Semarang administration proposed a 15 percent increase and Balikpapan a 20 percent rise.
On Tuesday, demonstrations continued in several parts of the country, including Mojokerto, East Java, where hundreds of workers rallied in front of the local administration office to demand the decree be scrapped.
"The joint decree has shown that the Susilo Bambang Yudhoyono-Jusuf Kalla administration is siding with the capitalists, not common people. This proves that the government is opposed to the poor," said rally coordinator Afik Irwanto as quoted by Antara.
He said the decree would disadvantage workers "because it legalizes the low standard of wages, nullifies social subsidies and supports the implementation of the contract-based system and outsourcing recruitment in companies."