Herdaru Purnomo – Indonesian President Joko Widodo's government is walking a tightrope as a new minimum wage is negotiated for Jakarta, seeking to balance a pro-business pledge against promises to help the nation's poor.

Workers in the capital, where Widodo was the governor until he won the presidential election this year, are calling for an increase of about a third in the minimum wage in 2015. Such levels would spur job cuts as companies couldn't afford the labor cost, the country's main employer group said, before a decision by the local wage council due tomorrow.

"Help Mr. Jokowi!" said Surya Purwanto, a worker at a pharmaceutical company, referring to the nickname the president is known by. "We hope that Mr. Jokowi as President, and Mr. Ahok as Jakarta governor, could improve the life of workers," he said, adding the current minimum wage is no longer adequate.

Unions and labor groups justify their demand for next year, which compares with the 11 percent wage increase granted for the current year, by citing an impending fuel price increase and rising costs for food. What is decided in Jakarta and its surrounding region, the nation's manufacturing center, will set the pace for factories across Southeast Asia's largest economy, carrying both political and economic implications for Jokowi.

"There are of course risks that the 30 percent wage hike demand will turn out to be a boomerang – relocation of manufacturing plants, for example," said Gundy Cahyadi, a Singapore-based economist at DBS.

"Jokowi/Ahok's success in capping this year's hike to 11 percent despite higher demands, is a sign that they are not just blindly implementing policies that benefit the poor."

Jokowi, who took office last week, has vowed to spur sagging growth in the world's fourth-most populous nation by attracting investment, expanding manufacturing and cutting red tape. He also wants to reduce income inequality, in a country where more than 40 percent of the population, or 100 million people, live on less than $2 a day, according to the World Bank.

The Indonesia Workers Confederation Union is seeking a wage increase of as much as 64 percent, and a minimum of 30 percent, said its leader M. Rusdi. It wants the government to add phone credit, fridges and perfume as essential items into a basket of goods used to calculate worker living costs.

"We cannot work if we smell bad, so perfume is now a priority for us," Rusdi said. "We will do anything to get our minimum wages up by 30 percent, such as demonstrations."

Workers in the capital, where wages are a benchmark for the country, may settle for a 27 percent increase to 3.1 million rupiah ($256) a month, said Dedi Hartono, a labor representative on the Jakarta Wage Council, a body comprised of workers, employers and government that is scheduled to announce the annual salary tomorrow.

For the employers' association, known as Apindo, anything more than a rise in line with annual inflation of about 5 percent will be too much, said Chairman Sofjan Wanandi.

"If it's on top of that, we give up," Wanandi said. "Next year there could be more massive layoffs of 100,000," he said, calling on government leaders to create jobs instead.

Source: http://thejakartaglobe.beritasatu.com/business/jakarta-workers-seek-bigger-pay-jump-fuel-increase/