President of Indonesia’s trade union confederation, KSPMI and trade union FSPMI

Indonesia – unions demand review of wage setting law

22.03.2017

Trade unions in Indonesia want the government to abolish a new law that has eliminated unions’ role in setting the minimum wage and resulted in low pay increases for workers.

Previously, a tripartite body of local government, employers and labour unions determined the minimum wage in each region every year, based on standard living costs. The agreed figure was then approved by the Governor.

However, the new legislation known as Government Regulation (PP) No. 78/2015 has ended workers’ involvement in setting the minimum wage and is based on inflation rates and economic growth. It ignores the regional wage councils, placing all power with the regional governor.

Consequently wage increases for workers in 2017 have been extremely low.

“The government is putting business first rather than workers’ welfare,” said Said Iqbal, President of IndustriALL Global Union affiliate the FSPMI metalworkers’ union.

“Indonesia is number three in the world for economic growth. Why then are we having such small wage increases of only 10 to 20 dollars. In some cities, like Geneva or Singapore, this would only buy you one kebab. It is very unfair, it is a crazy policy,” emphasized Iqbal, who is also President of Indonesia’s trade union confederation, KSPI.

Wages in Indonesia are poor. In Jakarta, which has the highest wages, the minimum wage for 2017 is IDR 3.35 million (US$250), an increase of less than 20 dollars from 2016. In Central Java, the minimum wage is as low as 1,367,000 (US$102) a month.

“We need investors in Indonesian countries, but the Gini Index shows that there is only economic growth for the rich man, only for the investor, only for the management. But workers don’t benefit. We want a judicial review of the law in the Supreme Court,” said Iqbal, adding that he welcomed the support from IndustriALL and the International Trade Union Confederation in their campaign.

IndustriALL General Secretary, Valter Sanches, has written to the President of Indonesia, Joko Widodo, calling for the government to include trade unions in setting the minimum wage, in accordance with employment law in the country and ILO Conventions on freedom of association and the right to organize.

“The lack of participation of unions in setting the minimum wage has had an adverse effect on the minimum wage at the regional level, thus keeping wages far behind in relation to the rate of growth of the economy,” said Sanches.