Sunday, November 19, 2006

Minimum wage increase adjusted to inflation

City News - November 14, 2006
Adisti Sukma Sawitri, The Jakarta Post, Jakarta

Although 20-year-old Iwan Efendi has no plans to quit his job as a janitor at an office building in Kebon Sirih, Central Jakarta, he does not exactly enjoy work either.

He has to stay in the office for more than eight hours to keep it clean and comfortable. And for that, he receives Rp 800,000 (US$86.90) a month, slightly below the city's minimum wage.

He said the only reason he stayed on is that a high school diploma did not open many doors in the city.

He seemed indifferent to the news the minimum wage will be raised next year by 9.5 percent to Rp 900,560 from the existing Rp 819,199.

"I don't think it will do much to my salary," he said Monday.

The city settled the amount earlier this month after a price survey of 46 basic grocery items at 10 traditional markets in Jakarta, conducted by the tripartite Jakarta Minimum Wage Settlement Board two months ago.

The board first proposed the minimum wage be raised to Rp 991,998. The administration, however, revised it down to Rp 900,560 after considering the city's economic growth projection of 6.6 percent and inflation projection of 7 percent next year.

Jakarta Manpower and Transmigration Agency head Rusdi Muchtar said that although the raise was not ideal, it would enable the city to provide 71,000 new jobs next year.

"We can't increase it any further without endangering the growth of job opportunities," he said Monday.

Based on Central Statistics Agency research, every 1 percent increase in the minimum wage lowers the number of new job openings by .11 percent.

Jakarta Labor Association chairman Gibson Sihombing, who is also a member of the Minimum Wage Settlement Board, said that although the minimum wage was still far below expectations, it was still better than this year's.

This year's inflation rate of 16 percent negated the 15 percent increase in the minimum wage, leaving workers no better off, he said.

Gibson said that although there was no guarantee the inflation rate would not exceed the projection, it was "a win-win solution" for the city's macroeconomic condition.

The administration and businesspeople must stick to the wage agreement, he said. "The problem is, they never really intend to follow contracts through -- they're only worth the paper they're printed on."


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