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Labor-intensive industry
gets wage freeze

Bowing to pressure from businesspeople, the government has decided to allow labor-intensive firms including textile, garment and shoe manufacturers, to seek a delay in raising the minimum wages for their workers.

During a limited Cabinet meeting on Tuesday, President Susilo Bambang Yudhoyono asked related ministers to provide a mechanism for companies to enjoy a suspension in adopting the new minimum wages.

“If you feel burdened by the new minimum wages, you can lodge complaints with your respective provincial administrations who will audit your firms’ financial performances. An audit is required as part of the process for the suspension,” Manpower and Transmigration Minister Muhaimin Iskandar said.

Industry Minister MS Hidayat added that the government had prioritized companies in three sectors to enjoy the leniency.

“Labor-intensive companies, which comprise textile, garment or shoe industries, are exempt from the wage increase. This means that they may propose a suspension to their respective governors,” he said.

Small and medium enterprises, meanwhile, are completely excluded from the new minimum wage policies, according to Hidayat.

Coordinating Economic Minister Hatta Rajasa admitted that the complicated bureaucracy, not to mention many invisible costs, should be handled to ease the burden on companies.

“The President also gave directives that we should consider some kind of non-cash incentives. Unnecessary levies, for example, must be reduced,” he said.

Hatta added that companies hit hard by the new minimum wages should intensify employer-worker (bipartite) talks.

“The government basically agrees that we must keep our conducive investment climate by taking care of our workers, particularly by providing decent pay. However, we must also protect the industrial sector,” he said.

The minister also asked workers to recognize the significant increase in minimum wages with a commitment to not conduct further massive and violent rallies or sweepings.

As many as 25 provinces have decided on their respective minimum wages for 2013, with the highest increase of 44 percent in Jakarta.

Jakarta’s newly elected Governor Joko “Jokowi” Widodo announced last week that the capital’s minimum wage would be set at Rp 2.2 million (US$229.17), an increase from this year’s Rp 1.5 million.

The Indonesian Employers Association (Apindo) plans to challenge Jokowi’s decision via the State Administrative Court and the Constitutional Court.

Apindo has also threatened that at least 10,000 workers could lose their jobs after the new minimum wage is implemented on Jan. 1, 2013.

Responding to the government’s move, chairperson of the Federation of All-Indonesian Workers Union (FSPSI) Ari Sunarijati warned that it may anger workers.

“The government’s decision can be understood as an insult to the workers’ movement,” Ari said.

For the last couple of weeks, thousands of workers roamed the streets of several big cities in the country, demanding an increase in their minimum wage.

Ari said the government’s latest regulation could be used by employers to avoid their obligations.

“Employers could just come to the government and say that they are not ready. We never know when they are lying,” she said. (riz)

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