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Workers, employers clash over rule letting firms slash pay by 25%
Workers are threatening mass protests and a lawsuit over the new regulation, while employers say without it, there would be layoffs.
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Workers operate sewing machines at a garment factory in Bogor, West Java, in September 2018. (Antara/Yulius Satria Wijaya)
T
he government has allowed employers to temporarily reduce their workers’ pay by up to a quarter to lighten the burden of industries heavily impacted by slower exports amid weakened global demand.
Article 8 of Manpower Minister Regulation No. 5/2023 states that employers can adjust wages to no less than 75 percent of the normal amount for 6 months since the provision took effect on March 8.
The same regulation allows firms to temporarily cut working hours to less than the usual 40 hours a week.
Only businesses that operate in the textile, footwear, leather goods, furniture or children’s toys industries and rely heavily on demand from the United States and Europe may avail themselves of those options, according to Article 3 of the regulation.
Confederation of Indonesian Workers Unions (KSPI) chairman Said Iqbal contested the provision and said workers would respond with a protest in front of the ministry’s building and file a lawsuit with the State Administrative Court (PTUN).
The rule may be against the law, he said, arguing that it could push workers’ pay below the minimum wage, as many were already close to that threshold.
The regulation was structured in a way that allowed businesses to misuse it to pay their workers much lower wages, he said in a statement on Wednesday, adding, “This can be harmful for our country.”
