Industrial stakeholders have asked the government to revise the minimum wage system as a prerequisite for healthy industrial relations and international competitiveness.
Concluding a three-day workshop on 2009-2025 industrial relations design Tuesday, workers, employers, experts and officials agreed that President Susilo Bambang Yudhoyono had to include such a revision in his 100-day program to kick-start progress in the labor sector in the next five years.
Labor unions criticized the wage system, which they said caused social injustice, weakened workers' purchasing power and had increased poverty in the last five years.
"These discussions on improving industrial relations are wasting time and energy while workers remain underpaid," Thamrin Mossie chairman of the Indonesian Trade Union Confederation (ITUC), said.
ITUC represented 150 unionists taking part in the meeting.
"This issue is a time bomb for the government and employers unless it is resolved immediately," he added.
Muhammad Aditya Warman, deputy chairman of the Indonesian Employers' Association (Apindo), laid the blame on several aspects of the 2003 labor law.
"The current minimum wage system and outsourcing, contracting and apprenticeship practices are part of employers' strategies to achieve cost efficiency which have *overexploited' workers and affected the competitiveness of Indonesian products internationally," he said.
The labor law must be reviewed to redefine the remuneration system and rules on outsourcing and contract-based practices to improve industrial relations and to create job security among workers, he added.
"As part of the review, the controversial chapters on severance and service payments have to be revised to give employers flexibility in managing their employees," he said.
Outsourcing and contracting practices have become widespread following the revision of the much-criticized 1997 law into the current 2002 labor law. Many companies have outsourced parts of their non-core jobs to outside parties, paying the workers minimum wages and providing no social security protection.
The government and employers on one side and workers and labor unions on the other are deadlocked over controversial issues following violent mass rallies on May Day in 2005. Yudhoyono previously declined a revision recommended by an in-depth study by seven state universities, citing political, investment and security reasons.
Payaman Simanjuntak, a labor economist and professor at the University of Indonesia, who took part in studying the labor law, stressed that the minimum wage system was no longer relevant in improving the country's productivity and competitiveness, and a new remuneration system had to be created on the basis of job competence and productivity.
Meanwhile, the ILO reported from Geneva on Tuesday that the global growth in real wages slowed dramatically in 2008 as a result of the economic crisis and is expected to drop even further this year despite signs of a possible economic recovery.
