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Jakarta Post

Government ‘must end cheap wages policy’ to compete globally

  • Ridwan Max Sijabat

    The Jakarta Post

  /   Tue, December 11 2012   /  11:26 am

While executives have complained that recently approved wage hikes smell of populism and capitulation to unions, several economists say that the increases reflect a needed update of the cheap labor policy of previous decades.

Cheap wages are no longer suitable with global standards, according to economist Payaman Simanjuntak, a professor at Krisnadwipayana University in Jakarta.

Indonesia, one of a few countries recording growth of 6 percent or more, must meet industrial and labor standards set by the International Labor Organization (ILO) and other world financial institutions to maintain its economic performance and to compete with other developing countries, Simanjuntak said.

“Decent work and decent pay are prerequisites, because its economic performance will be considered unreal if ISO standards in management and human resources development are not fulfilled,...