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Wage, duty hikes affect small cigarette producers
Hundreds of workers at cigarette producer PT Cakra Guna Cipta in Pakisaji, Malang, went on strike Wednesday, demanding the company pay them the 2009 minimum wage and phase out the labor contract system, which they claim had weakened their purchasing power
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Hundreds of workers at cigarette producer PT Cakra Guna Cipta in Pakisaji, Malang, went on strike Wednesday, demanding the company pay them the 2009 minimum wage and phase out the labor contract system, which they claim had weakened their purchasing power.
The protesters, rallying at the factory in Kendalpayak village, said they were still paid according to the 2008 minimum wage, which was lower than the new minimum of Rp 945,000 (US$85.90) per month that came into effect on Jan. 1, 2009.
"All cigarette producers in the regency should have paid their workers according to the new wage hike, but even now, our management still pays us Rp 900,000 per month, contrary to the regulation," said Misdi, protest coordinator and unit chairman of the Committee for Struggle of Indonesian Labor (SPBI).
He added most workers at the company and other small cigarette factories were employed on labor contracts with daily payment.
Sri Wilujeng, 43, said she was a permanent worker and was paid Rp 13,500 for each 1,000 cigarettes she pinned, while contract workers were only paid Rp 9,300 each per 1,000 pinned cigarettes.
Hariati, also employed in the packing section, said almost all workers in that section were underpaid, with a gross monthly income far below the new minimum wage.
She added the workers used to work eight hours a day, but with the implementation of the contract system, working hours had been slashed and workers were making less money.
In their defense, small cigarette producers say they face hefty burdens from not just the wage hike, but also from a shrinking market and an increase in cigarette duty as regulated by the Finance Ministry's Regulation No. 203/2008, prompting many factories to dismiss workers.
Muhammad Geng Wahyudi, chairman of the local branch of the Forum for Indonesian Cigarette Producers (Formasi), said the forum had 112 members in the regency, most of whom had dismissed workers because of the new wage and tobacco duty hikes.
"We are being overburdened because the minimum wage and cigarette taxes have been raised annually," he said.
He pointed out cigarette producer Ageng Java, which had downsized its workforce from 400 to 51 workers, as well as producer Adi Bungsu, which had gone from 600 workers to 50.
Geng Wahyudi added the ministerial regulation was discriminatory because it benefited major cigarette producers that used modern technology and engines, as opposed to smaller producers who made cigarettes manually.
"Many small companies are under the threat of bankruptcy, because they can no longer compete with big companies that employ modern technology in their production process," he said, adding that smaller producers had asked the House of Representatives to fight for incentives for them to prevent layoffs.
He also said he was working with small cigarette producers in Central Java to fight for incentives, amid fierce competition from major producers, including PT Gudang Garam in Kediri, PT Bentoel in Malang, PT Sampoerna in Surabaya and PT Djarum in Kudus, Central Java.
