Grace D. Amianti, Jakarta – Indonesia's two most powerful business lobby groups deem the minimum-wage increase in some regions, including Bekasi and Sukabumi in West Java, as "unrealistically" high and say it has created unfriendly investment conditions for businesses.
Talks to determine the minimum-wage increase have also been deemed as unfair because they did not take into account the voice of employers, while Law No. 13/2003 on employment stipulates that the government must act as a neutral mediator in a tripartite way between employers and workers.
Hence, the Indonesian Employers Association (Apindo) and the Indonesian Chamber of Commerce and Industry (Kadin) announced on Sunday that they had decided to withdraw from the National Productivity Council (DPN) in several regions to protest the 2015 minimum regional wage increase.
The Bekasi administration decided the minimum-wage amount for the city through a voting system even though Apindo walked out of a recent meeting, Apindo deputy chairman Hariyadi Sukamdani said.
In Sukabumi, Apindo viewed that the city's regional administration had "made up" the minimum-wage decision based on political or group interests, he added.
"The regional administrations were supposed to be neutral mediators, but they created a difficult climate for businesses instead," Hariyadi said. "The minimum wage in Bekasi was decided directly only in one meeting based on an unreliable survey of the basic cost of living [KHL]."
The Bekasi Wage Council decided on Nov. 14 that the city's minimum wage for next year would be Rp 2.95 million (US$241.5) per month, a 20.9 percent increase from Rp 2.44 million this year and higher than the Rp 2.7 million per month for Jakarta starting next year. Meanwhile, Sukabumi's minimum wage would be Rp 1.9 million per month next year, up 26.6 percent from Rp 1.5 million this year.
Hariyadi said both Apindo and Kadin would file legal charges against several regional administrations and conduct bipartite methods to discuss the wage issue with their workers. "There will probably be chaos in the process, but we will face it and we will also deliver our objections to President Joko Widodo," he added.
This clash has earned Bekasi, Sukabumi and several other undisclosed regions the title of being "unfriendly to investment", said Hariyadi, adding he would not suggest that local or foreign investors did business there.
"We are concerned that the government, which is supposed to be our partner, acted absurdly. The government wants to create jobs and ensure a good investment climate, but [this situation] kills them instead. With these conditions, investors are worried and will decide to just wait and see," said Benny Sutrisno, Kadin deputy chairman for employment.
Tony Prasetiantono, a Gadjah Mada University economist, said the government should approach Apindo and Kadin to ensure its position as a fair mediator between employers – who needed protection for their businesses' sustainability – and workers, who also have the right to improve their welfare.
Regional administrations sometimes want to provide better welfare for workers but tend to forget about the sustainability of companies, according to Tony.
Institute for Development of Economics and Finance (Indef) director Enny Sri Hartati also reminded the government to create fair conditions for both employers and employees to ensure a conducive investment climate.
The Manpower Ministry should thoroughly study the needs of workers and businesspeople, as well as review recent employment regulations that are considered "unfair" for both sides, Enny said. "The ministry should also revitalize training centers in all regions to improve workers' skills and productivity, which may prompt better wages in the future," she added.