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Wage based on productivity? Not yet for Indonesia, Airlangga says
“We have yet to implement productivity-based minimum wage due to public backlash.”
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Factory fashions: Workers operate sewing machines at a garment factory in Bogor, West Java, in September 2018. The government wants Indonesia to be a top-five world textile producer by 2030, but several businesses in the industry have had to close amid tight competition. (Antara/Yulius Satria Wijaya)
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ndonesia has yet to implement a productivity-based minimum wage despite a recent study suggesting that the country’s productivity in the manufacturing industry is lower than that of its peers in Southeast Asia.
Coordinating Economic Minister Airlangga Hartarto said the country would need to provide jobs for 7 million unemployed Indonesians, adding that investment in labor-intensive industries would be able to provide the much-needed jobs.
“We are still implementing provincial or regional minimum wage, which increase is […] not based on productivity,” said Airlangga during an interview with The Jakarta Post on Monday. “We have yet to implement productivity-based minimum wage due to public backlash.”
“Productivity is high in the country’s capital-intensive industries because of automation but we need to create jobs through labor-intensive industries, which has low productivity,” the Golkar Party politician said.
President Joko “Jokowi” Widodo’s administration submitted the highly-anticipated omnibus bill on job creation to the House of Representatives for deliberations in a bid to attract more investment and reform labor regulations to help jack up the country’s sluggish economic growth.
The bill faces objections from several labor unions as they say the bill risks to undermine labor rights.
