The minister proposed the idea to raise regional minimum wages by 15 percent following the outcries of business officials, particularly small businesses, over the newly raised Jakarta minimum wage, setting the minimum wage at Rp2.2 million by Jakarta Governor Joko Widodo.
Chairman of the Indonesian Labor Workers Association (MPBI), Said Iqbal, said his organization was opposed to the minister`s proposal for a 15 percent wage increase, as well as the opportunity for industries to file a request for a postponement of the new Jakarta minimum wage hike for next year.
Manpower and Transmigration Minister Muhaimin Iskandar has said small and medium businesses that could not afford to pay the new minimum wage could seek a deferment.
"The application, however, must be done according to the mechanism and by bringing forward a two-party agreement between companies and workers," he said.
Indonesian Labor Workers Association Chairman Said Iqbal said providing exceptions to the newly established regional minimum wage hike should not be carried out on a collective basis, but determined individually.
"The deferment in the implementation of the regional minimum wage (UMP) hike should not be carried out collectively, because each employer has to meet certain conditions. If the deferment is carried out on a collective basis, it would contradict the law," Iqbal said here on Saturday.
The Indonesian Employers Association (Apindo) has planned to postpone implementing the Jakarta regional minimum wage increase, which was fixed at Rp2.2 million per month for 2013.
It said that the increase was a jump of 44 percent over the previous Rp1.5 million.
"The basic living cost (KHL) should ideally be set at Rp1.9 million, but the Jakarta governor has raised it to Rp2.2 million, or about 44 percent. This is just proof of the fact that the governor wants labor-intensive industries to slump and is encouraging them to relocate their factories outside of Jakarta," Ernovian G Ismy, secretary general of the Indonesian Textile Producers (API), said.
Further, some 60 companies will ask the Jakarta city administration to postpone the introduction of the 2013 minimum wage, saying that the Rp 2.2 million ($229) per month set by the government is too great a burden.
According to Iqbal, one of the requirements that employers had to meet before they could postpone payment, based on the new minimum wage ruling, was that they should first receive approval from their employees` trade unions.
"MPBI also rejects the idea of the industry minister, who said that the ideal increase of the regional minimum wage for labor-intensive industries is 15 percent, as well as the minister`s idea to offer a chance for industries to ask for a postponement in the implementation of the wage increase," he said.
Industry Minister MS Hidayat said that the ideal regional minimum wage increase for micro, small and medium scale businesses is at 15 percent from the previous rate.
"Labor-intensive, micro, and medium scale firms are given a chance to defer implementation of the wage increase (if the hike could incur losses)," the minister said when officiating at the opening of the third factory of PT Denso Indonesia in Bekasi, West Java, on Friday.
He said, further, that local industries should continue to proceed with their production process and avoid becoming traders for imported products. The minister added that local industries can hold two-party talks with their workers to negotiate the wage problem so that companies would not violate regulations of the provincial minimum wage (UMP).
"If industries do not take the step, it is feared that they would end up laying off workers," he said.
According to Iqbal, postponements in raising wages would violate the law because the newly raised regional minimum wage has been ordered by the governor, and only the governor can postpone the wage hike, in accordance with Law No. 13 /2003.
The other requirement is that companies are only allowed to file a request for the deferment of the wage hike if they have been unprofitable for two consecutive years. Such businesses must also pass an auditing by public auditors and the request to delay enacting the wage increase must receive approval from the workers unions.
"If Apindo carries out the deferment collectively, we will stage a large scale demonstration," he said.
In the meantime, General Chairman of the Indonesian Commerce and Industry (Kadin), Suryo Bambang Sulisto, expressed his regret over the regional minimum wage which was increased by 44 percent, without taking into account provisions as regulated in the law.
"Most of the labor-intensive, micro, small and medium-sized industries could not implement the wage increase," the Kadin chairman said.
He asked the government to provide special incentives to businesses, such as fiscal and monetary incentives. "The incentives are intended to safeguard the existence and increase the competitive edge of small industries and labor-intensive businesses," he said.
Also, the ministry of manpower and transmigration has issued a ministerial decision on the deferment of putting in place the new minimum wage. It is mentioned in the decision that businesses which are not able to pay the minimum wage can table a request for the deferment of the minimum wage implementation.
The request is submitted to the governor through the government agency responsible for regional manpower affairs within ten days, at the latest, before the minimum wage regulation becomes effective.
The request must be based on a written agreement between the employer and workers or workers union through a two-party agreement.