A

fter a delay of several days, Jakarta Governor Fauzi Bowo announced on Monday that the city’s monthly minimum wage (UMP) would be officially increased to Rp 1,529,150 (US$166.67) next year.

The increase was in accordance with the formal recommendation issued by the City Remuneration Board to the governor.

“The decision is still legal, despite the lack of a signature from the representatives of Indonesian Employers Association [Apindo] on the recommendation,” Fauzi said.

The current minimum wage for an unmarried worker with less than one year’s experience is Rp 1.29 million.

The remuneration board recommended earlier this month that the administration increase the minimum wage following workers’ threats to call a general strike.

With this year’s recommendation approved, next year Jakarta will have a minimum wage that is higher than the city’s standard cost of living [KHL] for the first time in six years.

“Next year’s UMP will be 102.09 percent of the KHL,” Fauzi said.

The KHL was set at Rp 1,497,838 for 2012.

The City Remuneration Board is comprised of representatives from the city administration, labor unions and employer associations and makes annual recommendations on the minimum wage to the governor, who has the final say.

According to Fauzi, the new minimum wage has been approved by all members of the board present during a meeting on Nov. 20, comprising representatives from the city administration and labor unions.

“We had sent invitations to employer associations but they did not attend the meeting,” he said, adding that their absence during the meeting did not affect the decision’s legality.

Employer associations invited to the meeting were the Jakarta branches of the Apindo and the Indonesian Chamber of Commerce and Industry (Kadin).

Employer associations have not approved any annual UMP increases since 2008.

Contacted separately, the Kadin Jakarta deputy chairman Sarman Simanjorang said that he was disappointed by the decision.

“We will hold a meeting with Apindo Jakarta soon after we receive a copy of the circular,” he said.

According to Sarman, who is also a member of the board, the 18.5 percent minimum wage increase will be too expensive for employers to meet.

“With inflation between 3.7 percent and 4.5 percent, and economic growth at around 6.7 percent, ideally the minimum wage increase would only be around 10 percent,” he said.

Apindo Jakarta deputy chairman Sugito said that the decision was unilateral and that he was afraid there would be negative repercussions next year, particularly the possibility of layoffs.

“While the workers’ buying power will undoubtedly increase, the employers might have a hard time paying their wages,” he told The Jakarta Post.

Jakarta Labor Forum spokesman Muhammad Rusdi said that employers’ concerns over layoffs were baseless.

He cited data an August 2011 survey by the National Statistics Agency that showed that the percentage of unemployed workers in the city decreased to 10.8 percent this year from 11.05 percent last year, despite the minimum wage increase.

Failure to meet minimum wage was punishable by law. Business owners face up to Rp 400 million in fines and one to four years in prison for violating the regulation.

Business owners, however, are allowed to request a waiver, which is only granted after audits prove that the business is undergoing financial difficulties. (mim)