Monique Handa Shafira, Jakarta – The Confederation of Indonesian Trade Unions (KSPI) and other labor unions will organize a national strike involving 5 million workers across Indonesia if the government raises the Value Added Tax (VAT) from 11 percent to 12 percent in 2025 and fails to meet minimum wage demands.

Said Iqbal, President of KSPI and the Labor Party, warned that the VAT hike would exacerbate the economic strain on low-income citizens and workers. He predicted that the increase would significantly reduce purchasing power, widen social inequality, and undermine the government's 8 percent growth target by pushing prices for goods and services higher.

"On the other hand, the expected minimum wage increase of only 1 percent-3 percent will not be sufficient to cover the basic needs of the people. This decline in purchasing power will negatively impact the market, threaten business survival, and lead to more layoffs across various sectors," Iqbal said on Tuesday.

In response, KSPI and the Labor Party have outlined four demands to the government. First, they are calling for an 8 percent to 10 percent increase in the minimum wage for 2025 to boost the purchasing power of the people. Second, they want sector-specific minimum wages tailored to the needs of each industry. Third, they are demanding the cancellation of the planned VAT increase. Finally, they urge the government to increase tax revenue not by burdening the poor but by expanding the taxpayer base and improving tax collection from large corporations and wealthy individuals.

If the government ignores these demands, KSPI and other unions are prepared to take action. Iqbal confirmed that a nationwide strike would halt production for at least two days between Nov. 19 and Dec. 24, 2024, to protest against the policies that are seen as harmful to workers and the lower-income population.

"The policy will not only harm purchasing power but will also worsen social inequality, as the poor will be forced to shoulder a greater tax burden without any corresponding increase in income," said Iqbal. "This approach resembles a colonial-style policy, burdening the people for the benefit of a select few," he added.

KSPI and the Labor Party remain firm in their stance, arguing that the tax increase and inadequate wage growth will further deepen the divide between the rich and the poor in Indonesia.

Source: https://jakartaglobe.id/business/labor-unions-plan-national-strike-if-vat-hike-goes-throug