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Employers to file suit against wage increase

A number of business associations from several regions are preparing to file a lawsuit against the regulation governing provincial minimum wages for 2013 at administrative courts and the Constitutional Court, the Indonesian Employers Association (Apindo) says

Linda Yulisman (The Jakarta Post)
Jakarta
Fri, November 30, 2012

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Employers to file suit against wage increase

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number of business associations from several regions are preparing to file a lawsuit against the regulation governing provincial minimum wages for 2013 at administrative courts and the Constitutional Court, the Indonesian Employers Association (Apindo) says.

The associations included textile and footwear business associations, along with Apindo and Indonesian Chambers of Commerce and Industry (Kadin) chapters in Batam, Banten, East Kalimantan and Jakarta, Apindo chairman Sofjan Wanandi said on Thursday.

This action was being taken because local firms could not cope with next year’s provincial wage increases, which could amount to more than 40 percent, he added.

At least 25 provinces recently set their respective minimum wages for next year, with Jakarta recording the highest increase of 44 percent to Rp 2.2 million (US$229.17), from Rp 1.5 million this year.

“Apindo and Kadin fully support the regional associations in making this move [appeal],” Sofjan told reporters during a press conference in Jakarta.

Besides that, Sofjan said that Apindo and Kadin would facilitate bipartite negotiations between workers unions and firms in the labor-intensive industry.

“We expect them to discuss and agree on how much the firms can afford to pay, whether it be 10 percent or 20 percent. The bipartite talks will decide this matter,” he said.

Apindo and Kadin’s stance came following the government’s recent decision to allow a delay of the minimum wage increase for local firms in the labor-intensive industry, comprising garment, textile and footwear manufacturers, which employs around 3 million workers, and the exemption of small and medium enterprises (SMEs) from the minimum wage policy. Under this new rule, firms can file for a postponement of the wage increase with their respective local administrations.

For the past several years, debates to determine annual minimum wages have always ended up being contentious battles between workers unions, employers associations and local administrations. Last year, for example, Apindo filed lawsuits at the State Administrative Court against the gubernatorial decrees on the minimum wage in Banten and West Java.

The deputy chairman of Kadin’s Jakarta chapter, Sarman Simanjorang, said during the press conference that around 60 garment manufacturers in North Jakarta’s bonded zones of Cilincing and Marunda had officially submitted a postponement request to Jakarta Governor Joko Widodo on Thursday.

Harijanto, the advisory board chairman of the Indonesian Footwear Association (Aprisindo), said that under the planned bipartite talks, footwear manufacturers, most of whom were export-oriented, would likely propose an increase of between 10 percent and 15 percent to their workers.

If forced to increase wages beyond that level, firms would have to relocate their manufacturing activities to other rival countries, such as India, Malaysia and Vietnam, he added.

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