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Amid a nationwide clamor for minimum-wage increases, a
powerful employers' grouping has argued the need for wage levels to be
tied to productivity.
"Provincial, regency and municipal administrations should be deprived
of the right to set the minimum wage as they don't assess worker
productivity," Sofjan Wanandi, who chairs the Indonesian Employers
Association (APINDO), said Tuesday on the sidelines of a seminar on
productivity and remuneration.
"Workers need be paid salaries that are commensurate to their skills
and productivity. And, in this regard, their employers know best."
Under the current arrangements, minimum-wage levels are determined
jointly by regional governments, labor unions and employers.
Also present at Tuesday's seminar was Japan's deputy ambassador to
Indonesia, Satoru Sato, and representatives of the Nippon-Kaidanren
International Cooperation Center (NICC), which provides advice to
entrepreneurs.
NICC executive advisor Tosio Suzuki said, "An increase in productivity,
which is a major issue in most labor intensive industries, should mean
price decreases, not wage hikes."
"We need to increase worker productivity in order to alleviate poverty."
As a first step toward realizing its goal of linking wages to
productivity, APINDO plans to adopt the international standard for
measuring total factor productivity (TFP), which assesses the
productivity of human resources, capital, output and costs as part of a
single formula.
Assessments will be carried out jointly with experts from Japan,
Malaysia, Singapore, Norway and the Netherlands, and will also involve
local governments and labor representatives.
"We (APINDO and the NICC) are still at the initial stages, holding
discussions and workshops so that companies can learn about TFP,"
Sofjan said.
"The rigid minimum wage system must be changed, particular as regards
labor intensive industries. Otherwise, about half of our manufacturers
will be forced to close down in the next five to 10 years."
Currently, Japan is the country's largest foreign investor with more
than a thousand companies providing some 200,000 jobs.
Achmad S. Ruky, an expert on wage bargaining, said Indonesian workers,
together with those in the Philippines, had the lowest levels of
productivity of all Southeast Asian countries.
Based on 2003 figures, he said, Indonesian and Philippine workers in
the manufacturing sector were able to finish their tasks in eight
hours, and earned 33 U.S. cents per hour. This compared to Thai
workers, who earned 92 U.S. cents per hour, but were able to finish the
same tasks in two hours and 45 minutes.
Meanwhile, in Singapore and Malaysia, workers could finish the same
tasks within 11 minutes and an hour and five minutes, respectively.
"This clearly shows the low level of productivity of Indonesian
workers," said Ruky.
"What we need is a system that allows employers to pay their workers
based on their performances, a skills-based remuneration system and
different wage scales for different positions within a company.".
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