Surabaya – Due to the global economic downturn, the provincial government has allowed 14 troubled companies to underpay their workers.

Out of 37 companies filing requests to be exempted from the 2009 gubernatorial decree on the minimum wage hike, 14 were allowed to underpay their workers in an effort to ensure a gradual downturn and avoid layoffs, Indra Wiragana, head of the provincial manpower and transmigration office, told The Jakarta Post.

Indra explained that the government had no other alternative but to allow the 14 companies to change their pay structures. Under the plan, workers with less than one year experience would be paid in accordance with the 2008 minimum wage, and workers with more than one year at the companies would have to negotiate separately.

"The 14 companies have been transparent with their financial condition and the planned layoffs this year, and this reality has been negotiated with their workers," he said, adding that the government was considering giving incentives to companies if they were committed to paying their workers' income taxes.

He cited that 15 companies did not meet administrative and financial requirements as regulated by Ministerial Decree No. 231/2003 on the postponement of a minimum wage hike. The decree requires employers to negotiate with their workers and be audited by a public accountant before filing the wage hike postponement request.

"Eight other companies retracted their request before being assessed by the independent joint team representing workers, employers and the government," he said.

The provincial government has raised, by an average of 17 percent, the minimum wage in the 38 regencies and municipalities in the province, effective as of Jan. 1, 2009.

Chairman of Commission D on economic and labor affairs at the provincial legislature, Ismail Saleh Mukadar, said the government's decision was exaggerated because five of the 14 companies were state-owned enterprises which should postpone paying dividends, instead of underpaying their workers.

"We should bear in mind that despite the hikes, the minimum wage level is still far below the cost of living," he said.

He also questioned the low hike percentage in Surabaya and said the hike was not based on the price index in the city. "As a barometer, Surabaya should get a higher hike percentage than other regencies."

Coordinator of the Labor Defenders Alliance (ABM) Jamaluddin appreciated the government's decision and called for other companies to follow suit if they are facing financial problems.

"In fact, many small- and medium companies have paid their workers below the minimum wage without any permission from the government or any negotiation with their workers," he said.

Adi Chandra, an executive of the provincial chapter of the Indonesian Employers' Association (Apindo), appreciated the government's decision as a safe way to avoid any political instability triggered by labor unrest.

Despite the decision, however, he said Apindo would proceed with its complaint to the court about the recent minimum wage hike which it said would affect the economy in the province this year. (sal)