Jakarta – Cornered by thousands of workers who oppose a lawsuit filed to revoke recently approved minimum wage increases, Indonesian business associations have played their trump card, saying that the workers' livelihoods are under serious threat due to fleeing foreign investments.
An estimated 100,000 workers might lose their jobs and a potential investment loss worth US$2 billion would ensue should the recent wage increases in Banten and West Java be upheld, according to the Indonesian Employers Association (Apindo), which says it is in talks with foreign companies who say they intend to leave Indonesia due to the wage hikes.
"We have asked the companies to think about their decision before leaving West Java. We have told them to relocate their businesses to Central Java or East Java, not abroad," Apindo chairman Sofjan Wanandi said in Jakarta on Friday.
He said that South Korean, Taiwanese and other East Asian companies in the footwear, textile and electronics sectors had announced they would move to Cambodia, where the minimum wage was $50 a month. "If those companies left Indonesia, more than 100,000 workers would lose their jobs," he said.
Hariyadi Sukamdani, who is also a member of the Indonesian Chamber of Commerce and Industry (Kadin), said that the potential losses from those companies fleeing the country could surpass $2 billion within a year.
"The number would likely be higher if more and more companies left Banten and West Java. The impact would no longer be regional but nationwide," Hariyadi said. In addition, another potential damaging impact of the wage hikes, he said, would be that Indonesia would have to import more textiles and garments.
In the latest of a series of rallies to demand better pay, tens of thousands of workers in Bekasi and Tangerang, in West Java and Banten respectively, blocked roads connecting neighboring regencies to the capital on Thursday, causing severe traffic congestion. Police officers failed to prevent the workers from occupying the roads, causing hours of excruciating traffic snarls.
In Bekasi, workers closed seven toll gates in the industrial area, causing traffic jams on the inner-city toll road. Traffic congestion occurred on Jl. Industri, heading to the Lippo Cikarang Industrial area and Jababeka I and II.
In Tangerang, some 10,000 people protested in front of Apindo's Tangerang office on Jl. Gatot Subroto, carrying banners, posters and flags, forming a long train of marchers and motorcycle convoys, leaving kilometer-long traffic queues in their wake.
Workers asked Apindo to withdraw the lawsuit filed at the Bandung State Administrative Court that challenges the Banten and West Java administrations' decisions to increase the regional minimum wages.
Banten raised the minimum wage for workers in Tangerang by 10.79 percent from Rp 1,381,000 ($145.6) last year to Rp 1,529,000, while West Java has set the 2012 minimum wage at Rp 1,491,866, a 15.97 percent increase from 2011's wage, which employers already considered burdensome.
"Eighty percent of labor intensive medium employers are burdened by this and we have to save them," Sofjan said. He said regional policymakers had failed to listen to the recommendations of the National Wage Council (DPN) and had instead bowed down to political pressure from worker unions and their rallies.
He said that the DPN and Apindo had proposed to the Bandung Court that Bekasi's minimum wage be revised down to Rp 1,415,063. "That is a 10 percent increase from the wage in 2011 and it is still in line with the decent living standards [KHL]. We will not ignore the workers' livelihoods because they are our partners," Sofjan said.
He said the court had issued an interlocutory injunction that would preserve the subject matter of the litigation until the trial was over. The injunction was issued on Thursday, Jan. 19. He said that the final trial would be held on Tuesday, Jan. 24, and that he hoped the PTUN would approve the DPN's and Apindo's proposal.
Apindo secretary Suryadi Sasmita said that Indonesia could risk losing its good reputation if wage disputes became more widespread. "Image is very expensive and if we lose it, we could lose everything," Suryadi. (nfo)