Companies in Jambi province will lay off workers to survive financial problems stemming from the impacts of the global crisis, while those in West Java cannot pay their workers according to the set minimum wage.

"We will lay off around 350 workers," said Kurniawan, a spokesman for the Jambi-based pulp and timber company PT Wira Karya Sakti, adding that the move was a last resort for the company to survive.

"Hopefully, we can bring them back when the economic situation improves," he said. The company employs around 1,500 workers.

"The price of pulp has dropped from US$800 to $300 per ton."

The Indonesian Workers Prosperity Confederation Union's (KSBSI) Jambi Chapter has opposed the 10.5 percent increase set by the province for 2009, resulting in a minimum wage of Rp 800,000 (US$72.00), demanding instead that it be increased to Rp 890,000 per month.

However, the Jambi governor cannot fulfill their demands as he fears more layoffs.

"I cannot meet their demands because the government is concerned there will be further mass layoffs," Jambi Governor Zulkifli Nurdin said.

The 10.5 percent increase was based on calculations that have included an increase in the cost of living and in the national economic growth rate, he said.

Head of Jambi Manpower and Transmigration Agency Saleh Shibly agreed. The proposal was based on 46 standard of living criteria and in accordance with the standard cost of living in the neighboring provinces, he said.

"The KSBSI was apparently not in favor of it, but we must see it from more than one side. We must also think about the consequences," Saleh said.

His office will sit down with the KSBSI to discuss the issue and hopefully reach a mutual agreement before the minimum wage scheme is approved, he said.

KSBSI spokesman Roida Pane urged the governor to consider the social aspects of the workers before approving the minimum wage.

Ministerial Decree No. 17/2005 on components of minimum wage stipulates that realization of the standard cost of living is implemented in stages.

"However, based on a survey of the standard cost of living, the minimum wage should be set at Rp 1,101,116, compared to the Remuneration Council's proposal of Rp 800,000," Roida said.

In West Java, a number of companies operating in Cirebon will also likely fail to implement the minimum wage next year.

"They failed to implement it this year, how will they do so next year?" head of the Workers Social Protection Scheme's (Jamsostek) Cirebon office Adjat Sudrajat told The Jakarta Post on Thursday.

Adjat said that in 2008 alone as many as 440 companies across Cirebon (which includes Cirebon City), Indramayu, Majalengka and Kuningan regencies had not implemented the regency and municipal minimum wage. They also have not included their workers in the Jamsostek.

He said only 60 percent, or 660 companies, of the 1,100 companies listed at the Jamsostek in Cirebon had met the minimum wage requirements and had registered their employees at the Jamsostek.

However, of around 56,000 workers, only about 22,500 have received wages according to the minimum wage, he said. It was because companies that have implemented the set minimum wage and have participated in the Jamsostek program employed smaller numbers of workers compared to those which have not.

"They mostly employ less than 50 workers."

Most of the noncomplying companies are located in Cirebon regency and many of them are in the rattan and food processing industries, he said.

"They employ workers without clear labor contracts and provide salaries according to the employees' productivity levels," he said.

Cirebon regency has set its minimum wage at Rp 746,000 next year, compared to Rp 661,000 this year.

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