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Labor union rejects new wage raise formula

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Arif Gunawan Sulistiyono, Jakarta – A labor union rejected the government's plan to apply a new formula for an annual wage raise, unless the Manpower Ministry opened up the possibility of negotiations to revise the basic amount of the wage used in calculating the wage increase.

Confederation of Indonesian Workers Unions (KSPI) chairman Said Iqbal confirmed that all labor unions rejected the new formula.

"We urge the government to stop formulating the draft of a government regulation on wages. Let us – labor unions, business associations and the government's representatives – sit together to decide the formula for the 2016 minimum wage increase," he told thejakartapost.com on Friday.

Under the new policy, workers can expect a minimum wage increase every year that takes into account the current fiscal year's inflation and gross domestic product (GDP) growth.

Indonesia's minimum wage, he explained, was now at Rp 2 million (US$148) on average nationally. Even the minimum wage in Jakarta, as the capital city, is only Rp 2.7 million, less than Malaysia's minimum wage of Rp 3.2 million, Thailand's minimum wage of Rp 3.4 million, and the Philippines minimum wage of Rp 3.6 million.

Assuming 2015 inflation is 5 percent and the GDP growth rate is 5 percent, there will be a 10 percent annual rise in wages for 2016 (based on the new formula). It means that workers will only receive Rp 200,000 additional per month, reaching Rp2.2 million, Said stated.

"This is unfair. Therefore, we demand the government increase the basic wage, which will be used in calculating the 2016 minimum wage, before the new inflation-plus-GDP formula is applied. Take the 84 items in the cost of living [KHL] into account, or let us negotiate it," Said asserted.

Said highlighted that the labor unions were ready for a massive strike, involving 5 million workers nationwide in November, if their demands were not met. (ags/bbn)

Source: http://www.thejakartapost.com/news/2015/10/16/labor-union-rejects-new-wage-raise-formula.html.