The Jakarta Post
Bank Indonesia (BI) Governor Agus DW Martowardojo has said that significant wages increases will affect investment climate in Indonesia because wages and labor costs influence investment decisions.
'If wage rises are too drastic and are not based on a step-by-step process, there will definitely be an impact on the investment climate and business expansion in Indonesia,' Agus said in Palembang on Monday, as quoted by Antara news agency.
He was speaking in response to a massive workers strike today in which participants called on the government to set a new minimum wage for the province (UMP) in Jakarta.
Agus asked all related parties remain rational and in control of their emotions.
The governor said the workers' demand for a new minimum wage of Rp 3.7 million (US$333) per month was understandable due to rising food prices following increases in prices of two subsidized components ' fuel and electricity ' this year.
'On one side, a wage hike will increase the workers' purchasing power; but on the other hand, if the wage rise is too drastic, it will affect the investment climate,' said Agus.
'Therefore, all parties such as the Renumeration Board, the government and worker associations should coordinate to take an appropriate measure for the problem.'
Indonesia has seen average minimum wage increases of 18.32 percent in 2013, higher than the 10.27 percent average last year. (ebf)
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