Business players were
asking for assurance that minimum wages at resident/city level each year be
reasonably measurable. Certainty of pay was today necessary to save labor
intensive industry in Indonesia. If there was no certainty of wages standard,
labor cost in Indonesia was no longer competitive compared to that of other countries.
Government urged the Government to be realistic in increasing salary level of
small business [UMP/UMK] could be realistic or be considerate about company’s
condition.
As told, labor unions demanded salary in crease of 50% in
2014. The demand was made as compensation on increasing commodity prices in
2013. The increase was rated as jacking up 30% salary increase of works.
However, sofjan Wanandi of Apindo stated in Jakarta on Friday [23/8] that UMP
could not possibly increase by 50% in 2014. If UMP increased at that amount
companies would go out of business and mass dismissal of workers would continue.
“increased wages of 50% was most unrealistic at the present condition” Sofjan
said.
According to Sofjan, increase of UMP would be discussed
by workers and some big labor unions. Apindo would not stop labor unions
who refused company’s condition to stage demonstrations. In principle, Apindo
would not come to terms with labor unions considering companies’ condition at
the moment. He disclosed further the increase of oil price had not only reduce
workers’ purchasing power, but also companies’ capacity. Sofjan said that
increased oil price had also increased production cost.
About
tax incentives, Sofjan claimed that workers might feel that the incentives
offered no benefit for them. This was because taxes had always been paid by the
company for the workers, so it seemed as if workers receive their salaries in
full. From the company’s viewpoint, tax incentive would only be known to be
beneficial after the company calculated profit and loss account. He also asked
that the Government’s plan to offer incentive to labor intensive industry be
accompanied by legal certainty in terms of salary.
Sofjan was of opinion that three Government proposition
to allow exemption for income tax for workers would have no significant impact
on the effort to prevent mass dismissals. He said that today industrial players
needed certainty of formula on minimum wages each year. If this was not made
clear, if was feared that Indonesian companies of other countries. The result
was that investment might drop. To illustrate the average wages in Cambodia was
only one third of that in Indonesia.
Previously the Ministry of Industry M.S. Hidayat the
Government was today considering three options of incentive giving for labor
intensive industry. The three options were: the Government temporarily take
care of workers taxes, making tax cuts of company’s tax income, and increase
level of nontaxable income [PTKP]. The Ministry of Industry tend to tend to
chose the option of tax suspension by Government.
This
proposal was in the process of fine tuning at the Ministry of Finance and was
to be released soonest so it could be put in effect as payroll formula next
year. Sofjan did not deny that the three incentive proposal could enlighten
business people’s burden. However, tax incentive would only be effective if
companies considered profit and loss. He added on that increase of minimum
wages early this year, had caused 60,000 workers employed at Korean companies
to be dismissed. The workers were of three industrial sectors: electronics, footwear,
and textile.
Business News - August 28, 2013
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