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Jakarta Post
The Jakarta Post
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Regions gear up for new wage hike amid investors'€™ concerns

  • Rizal Harahap and Indra Harsaputra

    The Jakarta Post

Pekanbaru/Surabaya | Fri, October 31, 2014 | 11:16 am

With several regions in the country having increased the 2015 provincial minimum wage (UMP) and others determining an appropriate pay rise, the Japanese government has warned of the potential financial burden on its investors.

The Riau administration has set the province'€™s UMP for 2015 at Rp 1,878,000 (US$156) per month, up by 11.47 percent from its current level.

Riau Remuneration Council secretary Ruzaini said the 2015 UMP was set during the a council meeting on Oct. 28.

'€œThe main consideration was the monthly basic cost of living [KHL] in 2014 of Rp 1,872,000. By percentage, the 2015 UMP is 103 percent that of this year'€™s KHL,'€ Ruzaini said Thursday.

According to him, the decision regarding the 2015 UMP was final, as it had involved all stakeholders. '€œIt involved not only representatives from relevant parties but also the Central Statistics Agency (BPS) and academics in order to obtain a comprehensive study,'€ said Ruzaini.

However, the head of the Riau chapter of the All-Indonesia Workers Union Confederation (KSPSI), Patar Sitanggang, maintained that he was dissatisfied with the increase. '€œRiau is known for its high living costs, and the rise of Rp 178,000 per month is inadequate,'€ he said.

According to Patar, workers expected the 2015 UMP to be increased to between 19 and 20 percent, but the union representatives failed to impose their wishes during the remuneration council meeting.

Meanwhile, thousands of workers affiliated with the Indonesian Workers Alliance Congress (KASBI) staged a protest Thursday against the unchanged UMP in South Sumatra, arguing it was insufficient to meet their daily needs.

'€œWe reject the UMP, which is not commensurate with workers'€™ living costs,'€ Dodi Arianto, deputy head of KASBI'€™s South Sumatra chapter, said outside the South Sumatra Legislative Council (DPRD) in Palembang.

Separately, the Japanese government said it expected the East Java administration to review municipal and regency minimum wages so as not to burden investors from Japan.

Japanese Consul General Nomura Noboru said that based on a number of meetings with 50 large-scale Japanese investors in the East Java Japan Club, which holds meetings twice a week, any rise in the UMP should be accompanied by an increase in manpower productivity and skills.

'€œAlthough labor wage increases also take place in Vietnam, productivity and skills there are higher than in Indonesia. If the UMP here continues to rise without being accompanied by a corresponding rise in skills and productivity, there is a likelihood that many Japanese companies will relocate to Vietnam, which is also geographically closer to Japan,'€ Nomura told The Jakarta Post on Thursday.

East Java is currently home to 120 Japanese companies, in Pasuruan, Surabaya, Mojokerto and Gresik.

East Java Governor Soekarwo has yet to decide the amount of the UMP for next year, but he predicted that it would go up by 11 percent.

Soekarwo added that the UMP in East Java would not depend on the rate in Jakarta. Several trade unions have proposed that Surabaya'€™s monthly wage for 2015 should rise to Rp 2,860,000, up 21 percent compared to the city'€™s rate for this year of Rp 2.2 million.

Ansyor Idrus also contributed to the story.