SMALL AND MEDIUM INDUSTRIES OBJECTED TO DKI JAKARTA PROVINCIAL MINIMUM WAGE STIPULATION

Small and medium industries (lKM) objected to DKI Jakarta Provincial Minimum Wage (UMP) stipu­lation at Rp. 2.2 million/month. Euis Saedah, Director General of Small and Medium Industries at the Indus­try Ministry in Jakarta (Thursday, 11/22/2012) con­siders that UMP stipulation must be in favor of small industries. If UMP is high, it will be difficult for IKM to make adjustment. According to her, the government must favor small and medium industries. Sales turn­over of small and medium industries is not too big, so it will be difficult for them to pay wage at such a high rate. “The ability to pay wages cannot he equalized to large-scale industries”, she said.

Euis planned to coordinate with the regional government and the Coordinating Ministry of Economy to submit aspirations of small and medium industries. Wage stipulation should be in favor of small and medium industries. Minimum wage for small and medium industries must be given dispensation or exception. Euis said that her party will also coordinate with the Ministry of Cooperatives and Small and Me­dium Businesses to discuss about minimum wage for workers in IKM sector.

She considers that small and medium indus­tries are having difficulty in operating their businesses. They are having difficulty in financing operations and business sustainability, Therefore, if they are re­quired to pay a salary of Rp 2.2 million/month, it will be a burden to them. Even though income earned by small and medium industries is not as big as large-scale industries, the workers and the business op­erators are happy with their work output. Small and medium businesses in Indonesia are family-inherited businesses. She expected that there will be any other method to measure development of IKM sector. De­cent Living Standard (KHL) Index is less considered in IKM, and there should be a happiness index method for IKM sector. With creative products, IKM has had a market which it potential to become a big one.

She was pessimistic over the ability of IKM in Jakarta to pay UMP. According to her, they could close down their business if they are required to pay such a large amount of wage. Euis said that so far, workers have always asked for salary increase, but they did not balance it with increase of skills. If com­pared to workers’ wage in other countries having equal skills, workers’ wage in Indonesia is relatively high. She said that so far, the law has never distin­guished the industry scales so that treatment and policy applied to large industries were also applied to small industries.

She considered that it is unfair for small in­dustries who must work hard every day to survive. Therefore, small and medium industries’ entrepre­neurs urged a different minimum wage requirement for small industries. According to her, increase of UMP should not be applied to IKM as they could close down their businesses. “It will be difficult for IKM to adjust to UMP Policy 2013 due to fund limitation. Therefore, there should be a special standard system for IKM in determining UMP”, she said.

The Industry Ministry recorded that there are around 3.8 million units of IKM in Indonesia. 75% of this number is spreading over Java and 25% outside Java. Euis said that IKM plays an important role in de­velopment of people’s economy. IKM is proven tough in the midst of sluggishness of the global economy. And, IKM could absorb large number of workers and could promote even distribution of income. Indonesia needs thousands of new industrialists so that Indone­sia’s economy will have e strong fundamental.

Business News - November 28, 2012