F

ollowing the threat of a labor union strike, the Jakarta tripartite forum has recommended an increased minimum wage based on workers’ demand.

Member of the tripartite forum, also known as the City Remuneration Board, Mas Muanam said the board had recommended that provincial minimum wage (UMP) should be increased to Rp 1,529,000 (US$170) for 2012, up from last week’s demand of Rp 1,497,838.

“The [Jakarta] administration worried that the threat of a massive strike would materialize and decided to approve workers’ demands,” said Muanam, who is also the head of the Jakarta Workers Union (Aspek).

He said the decision was made in a meeting over the weekend and the proposal had been submitted to Governor Fauzi Bowo for its final approval.

The Remuneration Board is chaired by officials from the city administrations, representatives from labor unions and employers’ associations. The tripartite forum makes recommendations on minimum wages to the governor on an annual basis. Jakarta governor has the final words on the city’s minimum wage.

A ministerial decree on minimum wages requires provincial governments to decide on a new minimum wage two months before the new policy takes effect in Jan. 1 each year.

Chairman of the board, Deded Sukendar, however, denied suggestions that the board bowed to workers’ pressure.

“We received new data from the Central Statistics Agency and ran an evaluation on our previous decisions, which led to us change the figures,” said Deded, who is also head of the Jakarta Manpower and Transmigration Agency.

Deded said that if the governor approved the recommendation, the city would for the first time in six years have a minimum wage higher than the standard cost of living (KHL) in Jakarta.

The board had set the standard cost of living for 2012 at Rp 1,497,838.

Workers unions had set their standard cost of living at Rp 1,529,150.

Last year, the city increased the basic minimum wage for 2011 to Rp 1,290,000, a 15.38-percent increase from 2010’s Rp 1,118,009.

Deded also said that the average new minimum wage for 2012 would be higher than those set by local administrations in satellite cities in Greater Jakarta.

Depok has set the minimum wage for 2012 at Rp 1,453,875, Bekasi Regency at Rp 1,491,866 and Bekasi Municipality at Rp 1,422,252. Two local administrations in Tangerang are yet to announce the minimum wage rate for their respective regions.

Following the decision from the tripartite forum, leaders of labor unions in Jakarta decided to call off their planned rally.

The Jakarta Labor Forum, which consists of at least 10 workers unions, had planned to start a massive strike and rally across the capital on Monday, involving at least 85,000 blue-collar workers for the entire week.

Forum spokesman Muhammad Rusdi said the unions were grateful for the city administration’s willingness to listen to their demands.

“However, we will continue keeping track of the proposal’s progress until the governor makes his decision,” he said.

Rusdi expected that a higher minimum wage should also translate into a higher sectoral minimum wage.

The minimum wage applies only for an unmarried worker with under one year work experience.

A number of sectors have higher minimum wages. The city administration will also set new sectoral minimum wages by the end of this year.

The sectoral minimum wages are usually five percent higher than the regular minimum wage, especially for lucrative sectors such as the automotive industry.

Jakarta is one of the primary destinations for labor-intensive industries. Other provinces with such industries include West Java, East Java, North Sumatra, Batam in Riau Islands, Central Java, East Kalimantan and South Sulawesi.

Local governments in the provinces have yet to decide on minimum wages for their laborers.

Indonesia, Southeast Asia’s largest economy, has over the past three years enjoyed new investments in labor-intensive industries, such as textiles, garments and footwear, as many foreign companies have relocated their plants from Vietnam and China following the steep increases in labor costs there.