As more than 160,000 workers held rallies across the country to mark May Day on Tuesday, an economist said the government had its own work to do in improving the welfare of laborers.

Enny Sri Hartati, an economist with the Institute for Development of Economics and Finance (Indef), said one of the reasons companies were reluctant to raise the wages of their workers was the prevailing red tape and high-cost economy.

"The high-cost economy is caused by a complex bureaucratic process and bribery. The government should be able to address this through bureaucratic reform," she said.

The rallying cries from workers on May Day were for better wages and an end to outsourcing, and demands that May 1 be declared a public holiday. There were no reports of violence as of press time.

Enny said that with energy accounting for 15 percent to 20 percent of employers' costs, "if there were cheaper alternative energies, then industries would be more efficient and workers' wages would be more appropriate too." It is the government's responsibility to facilitate the development of these cheaper energy alternatives, she added.

The manpower and transmigration minister, Muhaimin Iskandar, said on Monday that the state would introduce several initiatives to improve the lives of workers, but Enny was not impressed. She said the proposed schemes and their targets were limited in scope.

Muhaimin said the government would raise non-taxable income to Rp 2 million from the current Rp 1.3 million, build three hospitals for workers, ensure cheap transportation in industrial zones and provide housing for laborers.

Enny said these incentives needed to be accompanied by social and health insurance for workers. She acknowledged that the government was making progress in preparing the Social Security Organizing Body (BPJS) to manage the National Social Security System (SJSN).

On the labor side, she said one block to better pay was the low skill level of many workers. "More than 50 percent of workers are only primary school graduates, so there are lots of workers with low pay. But there are also skilled workers [who are] still paid below minimum standards," she said.

The latest official data, from August 2011l, put the work force at about 110 million people, 49.4 percent of them with only a primary school education.

The same data showed the average minimum monthly wage in the country was Rp 988,829 ($107), among the lowest in the region. In Thailand the average minimum pay is $9.75 per day and in Malaysia it is $297 a month. Vietnam, while paying its workers less than Indonesia, recently raised the minimum wage by 27 percent to about $50.

Sofjan Wanandi, chairman of the Indonesian Employers Association (Apindo), said the organization was encouraging members to provide skills development for their workers. Apindo, he said, is also in discussions with the Manpower Ministry to conduct skills improvement training.

"Apindo," he said, "is ready to facilitate access for anyone willing to provide guidance, training, exercise and partnership to hold training programs." Sofjan cited the case of the Singapore Labor Foundation, which provides skills training coordinated by companies, the government and labor unions.

A report on global economic competitiveness, issued by the World Economic Forum, placed Singapore as the world's third most competitive economy.

The World Bank also named the city-state as the country where it is easiest to conduct business in 2012. Although it does not have a statutory minimum wage, Singapore's work standards and requirements are said to provide the opportunity for higher earnings.