INCREASED WAGES TO GO IN TANDEM WITH PERFORMANCE AND PRODUCTIVITY

Thousands of workers united in the Confederation of Indonesian Labor Unions (KSPI) again waged a demonstration at Hotel Indonesia Circle and the Presidential Palace. The workers screamed out protest to demand abolition the Government to abandon cheap wages policy an implement decent pay policy by way of writing off the Article on granulizing policy which failed to be exercised in five years, Minimum Sectoral Wages 10% of UMK.

Responding to the workers’ claim, Vice Chairman of the Association of Indoensian Businesspeople (APINDO) Djimanto stated in Jakarta on Thursday (12/7/2012) that wages had strategic meaning to the workers and families, the company or even the nation. To the workers he said, wages was needed to support oneself and the family and as motivation for performance and productivity. To the company, wages was one of the key components of production cost which might contract or expand profit. So the company would strive to suppress wages to as low as possible whereby to increase profit. From the Government’s viewpoint wages was a medium for income equalizing and promoting welfare.

Stipulation of the minimum wages itself according to Djimanto had the objective of promoting wages of workers whose salary were still below minimum level. However some studies disclosed that the policy of minimum wages did not only influence workers’ salary whose pay was around minimum level, but it also had the impact on the entire distribution of wages. Therefore policy of minimum wages finally had its impact on price, business climate and employment. Increase of minimum wages would promote their purchasing power which would eventually motivate spirit and increase productivity. “In this case one thing that must be understood is that increase of salary would bring benefit to companies provided workers increase their productivity”  Djimanto remarked.

According to Djimanto, payroll based on productivity was the fairest, because wages were paid to workers according to their respective productivity or group of workers respectively. The company’s condition and productivity were influenced by each respective worker. If workers productivity collectively increased, Djimanto said, company’s productivity would increase as well. Accordingly if company’s productivity increased, workers deserved to receive high pay.

Djimanto was expecting that betterment of workers’ welfare would have their positive impact on company’s productivity and profit. Businesspeople and labor unions must communicate to build a harmonious industrial relationship, democratization, and justice. Both parties must synchronize perceptions on ways of maintaining harmonious industrial relationship whereby to increase productivity drum up investment and most of all avoid dismissals.

To quote data of the Ministry of Labor and Transmigration (Menekertrans), Minimum Provincial Wages (UMP) 2012 on the average showed increase of 10.27%. The percentage was higher than average UMP increase of 2011 which was only 8.69%. As a whole attainment of UMP against average national Decent Lfe Component (KHL) of 2012 in 33 provinces spread out all over Indonesia reached 88.60%. Djimanto explained that minimum wages was minimum standard used as reference by business players or industrialists to pay wages within their business circles or working environment. Since fulfillment of decent living differs with every province it was called Minimum Provincial Wages.   

 Business News - July 18, 2012