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Jakarta Post

Wage hike will affect investment climate: BI

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Mon, October 28, 2013   /  05:23 pm

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.

'€œIf 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.

'€œOn 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.

'€œTherefore, 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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