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Jakarta Post
The Jakarta Post
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Ahok to raise minimum wage by 12.5 percent

  • Corry Elyda

    The Jakarta Post

Jakarta | Sat, November 15, 2014 | 10:55 am

Following a deadlock between workers and employers on Thursday, the city administration looks set to raise the minimum wage by 12.5 percent to Rp 2.7 million (US$221) from the current Rp 2.4 million.

Acting governor Basuki '€œAhok'€ Tjahaja Purnama stated that he would unilaterally decide the increase in the provincial minimum wage (UMP) and that the hike would be not more than Rp 2.7 million, slightly higher than the results of a basic cost of living (KHL) survey conducted in the city over the past few months.

The expected wage increase is not much higher than that proposed by employers.

The tripartite meeting held by the Jakarta wage committee on Thursday was deadlocked and finally, referring to the survey, employers proposed a minimum wage of Rp 2.69 million, while workers proposed a sum of Rp 3.5 million.

Ahok intimated that it was impossible for him to accept the workers'€™ demand of a Rp 3.5 million minimum wage, as the amount was far more than that suggested by the KHL survey. '€œI have told labor unions several times that our benchmark [for setting the minimum wage] is the KHL,'€ he said.

Ahok said that aside from the KHL, the city administration would take into account other factors such as economic growth and productivity, when setting the minimum wage.

'€œWe also have improved the level of the KHL. For example, now we assess instant noodles rather than flour and we'€™re using a higher mineral water price,'€ he said.

  • Ahok hints that monthly minimum wage will be raised to Rp 2.7 million
  • Expected wage hike higher than assessed basic cost on living in capital
  • Workers optimistic Ahok will set more generous minimum wage

Ahok revealed that his decision would also take into account the planned increase in fuel prices, which would affect the price index.

'€œI'€™ve planned to scrap fuel subsidies in Jakarta since last year, so we'€™ve already considered this,'€ he said.

According to the 2003 Labor Law, the minimum wage applies only to workers with no work experience, while those who have worked for one year or more are paid higher depending on their productivity, skills, work experience and position.

Asked about the higher wage hike in Bekasi, West Java, Ahok challenged workers in the capital to move to Bekasi.

He said, however, that the city would provide alternative public transportation for workers. '€œThey often complain that transportation fees are too expensive,'€ he said.

Elaborating, he said the city would build and operate new bus routes leading to factories. '€œThe bus fares will be cheaper,'€ he said.

Separately, Sarman Simanjorang, who represented employers on the Jakarta wage committee, said on Thursday that employers had proposed to increase the monthly minimum wage by 10.34 percent to
Rp 2.69 million.

'€œWe previously wanted to set the 2015 minimum wage as high as the KHL, which was set at Rp 2.55 million,'€ he said.

However, he went on, the employers eventually proposed Rp 2.69 million, considering economic growth and the inflation rate this year.

Sarman said workers'€™ representatives on the committee had demanded an increase to Rp 3.57 million.

'€œTheir sum was calculated in consideration of other factors like inflation, productivity and the estimation of increasing fuel prices,'€ he said, adding that while the government-set survey included 60 wage components, workers used 80 components in their proposal.

Sarman said in the absence of a tripartite agreement, the wage committee eventually decided to allow both workers and employers to file their own proposals to the acting governor.

'€œWe, the employers, hope that the acting governor will decide the wage increase wisely and not bow to pressure from workers, who have almost daily staged protests in front of City Hall over the past two weeks,'€ he said.

According to Presidential Instruction No. 9/2013 on remuneration, the minimum wage should have been set on Nov. 1, but the hike will come into effect on Jan. 1 of the coming year.

'€œLabor-intensive industries and small and medium enterprises are looking forward to the decision in order to evaluate their business'€™ situation,'€ Sarman said, adding that labor intensive companies could relocate to other provinces where the minimum wages were lower.

Jakarta Labor Forum secretary-general Muhammad Toha said that labor unions were hopeful that the minimum wage would be set at around Rp 3 million.

'€œIt would be strange if Ahok didn'€™t listen to our aspirations. He previously stated that the basic living cost in Jakarta was around Rp 4 million,'€ he said.