Jakarta (ANTARA News) - For Indonesian workers and employers, the governments announcement of its fourth economic policy package brought good news since it provided a sense of certainty to both, laborers and companies.

The package, which also deals with recipients of smallholders credit and financial assistance for export-oriented small businesses, covered policies in the employment sector and is aimed at improving the welfare of workers through an annual wage hike scheme.

Based on the new policy, workers minimum wages will increase every year, based on the economic growth and inflation.

The monthly minimum wage is the most crucial for workers since it will serve as the basis for the annual pay rise. If the economic and inflation rates increased by five percent each, the wage hike will be 10 percent of the monthly minimum wage.

As such, the minimum wage should meet the realistic cost of living, based on the decent living cost (KHL).

Therefore, all provinces in the country should meet the decent living cost in working out their provincial or regional minimum wages for workers.

Manpower Minister Hanif Dhakiri called on all the provinces to meet the KHL requirements which serve as the basis for deciding laborers minimum wage rate. He made the appeal since eight of the provinces were yet to meet the KHL standards.

Seven of the eight provinces are North Maluku, Central Kalimantan, West Sulawesi, Maluku, West Nusa Tenggara (NTB), East Nusa Tenggara (NTT) and West Papua.

The minister said the eight provinces needed to meet the decent living cost standard while implementing the wage system as suggested in the fourth tranche of the economic policy package announced by the government on Thursday (Oct 15, 2015).

"The government regulation on the wage system, which will soon be enacted, stated that regions which have not yet met the KHL requirement should comply with this standard within a period of four years at the latest," Minister Dhakiri told an editors forum on Friday night.

The governments regulation on the wage system is a follow up on the fourth installment of the government policy package issued on October 15, 2015.

Dhakiri said they were given four years because in the fifth year, the components of their KHL will be evaluated. At present, the decent living cost takes into account 60 items.

"After all, the peoples consumption patterns change in five years, according to the Central Bureau of Statistics (BPS)," the minister remarked.

For this purpose, the eight provinces are obligated to work out a road map to meet the required KHL components. If, for example, a province is only able to meet 92 percent of the KHL requirements now, it should meet the remaining eight percent in four more years.

Therefore, the formulation for wage hike applicable to these eight provinces is different from that specified in the fourth installment of the policy package.

Based on the policy package, the annual wage increase is formulated based on "minimum wage + (minimum wage x (inflation percentage + economic growth percentage))".

If Jakarta has a minimum monthly wage of Rp2.7 million with an inflation rate of five percent and an economic growth of five percent, the annual increase of wage in Jakarta will be Rp2.7 million + (Rp2.7 million x (5 percent + 5 percent ), which equals to Rp2.97 million.

However, for provinces which have not yet met their KHL standards, the wage increase is formulated as per the formula, "minimum wage +(minimum wage x (inflation percentage + economic growth percentage + annual road map plan rate of the regional government)).

The annual road map rate will depend on the governors of the provinces concerned. This regulation will be implemented in order to guarantee that workers do not fall prey to low wages.

The minister said the government regulation on the new wage system would be enacted as soon as possible. The provincial minimum wage in 2016 will be decided based on this new formulation, according to Minister Dhakiri.

The new wage fixing policy will not only provide protection to workers and job seekers but will also give a sense of certainty to the business world, he said.

"The wage fixing system as per this formula is a win-win solution. On the one hand, the workers will have certainty about an annual salary hike, while on the other hand, the employers will have certainty about the extent of the annual salary hike. Thus, it will not disrupt their financial planning," he said.

The wage hike formula will induce certainty into the salary system, thereby improving the investment climate and creating new jobs for 7.4 million job seekers in the country

According to Chief Economic Minister Darmin Nasution, the government issued the policy to improve the welfare of workers through a just, simple, and projected wage system. "The objective behind this wage formula is to increase employment opportunities for workers and laborers and to improve their welfare," he said.

Besides the wage hike system, the package also covered policies dealing with ways to improve social life, and the development and supervision of social dialogs at bipartite forums within companies. The minimum wage policy which adopts a formula system will act as a safety net to ensure that workers/laborers do not fall prey to low wages.

It also deals with the development and supervision of bipartite dialogs between employers and employees, he said.

The bipartite social dialog is the key to improving the workers welfare by applying a certain wage structure and deciding a scale as per which their wages are calculated, taking into account the period of work, post/class, education, competency, achievement and productivity.

However, according to Secretary General of the Confederation of Indonesian Labor Unions (KSPI) Muhammad Rusdi, the new wage policy will only benefit the employers.

"The wage policy will only benefit the employers and does not accommodate workers aspirations. Despite salary hike based on inflation and economic growth, Indonesian workers will remain poor although they are employed," he said in a press conference on Friday.

It is likely that only Indonesian workers who have been employed remain poor because they receive low salaries. In fact, in other countries, unemployed people receive allowances so that they can lead a fair life.

"For workers and other people, wages are the life line. The government has sided with the employers ever since the first, second and third economic policy packages were issued. We highly expected the fourth economic policy package to side with the workers," he said.


Reporter: Andi Abdussalam
Editor: Jafar M Sidik
Copyright © ANTARA 2015