Remuneration board expected to recommend increase of labor wages

Jakarta (ANTARA News) - Manpower and Transmigration Minister Muhaimin Iskandar hoped that the Remuneration Board would issue recommendation on the scale of increase in Provincial Minimum Labor Wages (UMP) which were expected to rise by about 20 percent in 2014.

"It is the governors who usually decide the value of labor wage increase without consideration from the Remuneration Board. Now it should be the Remuneration Board which should issue a recommendation to be followed by the governor," the minister said on the sidelines of a post-fasting gathering here on Tuesday.

However, the minister said that his office had yet to decide any formulation on the increase of the UMP.

"It is still under discussion, it has not yet been finished," he said.

He expressed hope that the remuneration board would make a decision so that labor-intensive companies would be helped with regard to salary payments.

"They must be given priorities so that they would not suffer only because of the increase in labor wages," Muhaimin said.

Regarding inflation, the minister said that regional minimum wages should be adjusted to inflation based on surveys.

"In essence, the governor should not make his or her own decision," the manpower minister stressed.

Earlier, it was reported that the government and companies were planning to raise the provincial minimum labor wages (UMP) to 20 percent in 2014 to balance inflation which was expected to increase.

Chairman of the Business Employers Association (Apindo) Sofjan Wanandi said the plan must be discussed in a tripartite forum which involved the government, employers and workers.

He said that the proposal of 20 percent increase was made in an effort to pull back investment made by labor-intensive companies which so far had been attracted to do business abroad as a result of the high UMP in Indonesia.

The proposal is also intended to anticipate a high inflation rate. Last year, the UMP was raised by 40 percent and this year laborers demanded an increase of 50 percent.

Industry Minister MS Hidayat has predicted that inflation in 2014 would be three to four percent higher than this year.

If this year, the inflation rate reaches seven percent, it would mean that next year the inflation rate would reach 10 percent.

"This should serve as a reference in the debate at the remuneration board forum. So, all could help bear the burden. Otherwise, it will be borne by the industry alone," the minister said.(*)