85 firms allowed to skip salary hikes

At least 4,150 workers employed in 85 companies in Java and Papua will not get a raise this year after the government exempted their employers from abiding by the obligatory minimum wage hike this year due to economic difficulties, a minister says.

“I have asked regional heads, including governors in West, Central and East Java and Papua, to closely monitor these companies’ economic conditions and facilitate them to grow better with incentives to allow them to improve their workers’ monthly salaries according to the pay hike this year,” Manpower and Transmigration Minister Muhaimin Iskandar said during the signing of a collective labor agreement between publicly listed
PT Unilever Indonesia’s management and their workers here on Monday.

A 2003 Ministerial Decree allows companies that face economic difficulties to suspend paying their workers in accordance with the provincial minimum wage regulations after gaining approval from their workers and the governors respectively.

The provincial minimum wages, which took effect only for newly recruited workers, have been raised between 4 percent and 15 percent in provinces, starting Jan. 1, 2011. Muhaimin explained the government would continue monitoring the 85 companies’ economic conditions and would asked them to comply with the monthly minimum wage regulations after their economic conditions improved.

Meanwhile, Indonesian Employers’ Association (Apindo) deputy chairman Djimanto, confirmed that only these 85 companies had requested to be exempted from the new minimum wage regulations but revealed that many small-scale enterprises and cooperatives, employing thousands of workers in rural areas, had not complied with the provincial minimum wage regulations citing economic difficulties.

“It is impossible for small companies with their small capital to pay their workers in accordance with the provincial minimum wages ranging between Rp 800,000 [US$80] and Rp 1,200,000. We should appreciate them for generating new jobs and helping the government ease the unemployment problem,” he said.

He added that Apindo had forged cooperation with the government, international labor organizations and large companies to empower small-scale companies and improve their capacity and productivity so that they could provide decent work and wages to their workers. Indonesia has been criticized for its low minimum wages, which are reported to have contributed to the increase in the number of low-income people from 32 million in 2008 to more than 40 million in 2010.

Muhaimin also said that the government would continue encouraging middle-scale and large companies and labor unions to create better industrial harmony to help improve national productivity and attract more foreign investors to invest in the country.

He regretted that only 276 of more than 214,000 private and state-owned companies had signed collective labor agreements with their workers and 1,683 companies had registered their labor regulations with the government.