Although the decision, made late on Wednesday, has yet to be signed by Governor Joko "Jokowi" Widodo, it has been considered a victory by workers who had long demanded a wage higher than the basic cost of living. The governor said yesterday that he would hold another meeting with labour and business representatives over the issue.
Jakarta Workers Forum secretary-general Mohammad Toha said his organization appreciated the new minimum wage.
"After struggling for a decent wage, we finally have a 44 per cent increase from last year's level," he said.
Earlier this month, the remuneration board increased the basic cost of living for a single worker by 32 per cent to 1.97 million rupiah from 1.49 million rupiah per month. The level was used as main the reference to decide the provincial minimum wage remuneration for 2013.
Prior to the announcement of the 2013 regional minimum wage, workers in the capital staged demonstrations to demand a minimum wage of 2.8 million rupiah.
For years, workers in Jakarta received wages lower than the basic cost of living. In 2011, as an example, the minimum wage was set at 1.29 million rupiah or only 92 per cent of the basic living cost of 1.4 million rupiah. In 2010, the wage of 1.11 million rupiah was 84.48 per cent of the living cost at that time. Not until 2012 was the minimum wage higher than the basic cost of living (102 per cent).
"We have decided that the city's minimum wage will be 2.22 million rupiah, higher than the basic cost of living of 1.97 million rupiah," board chairman Deded Sukandar, who is also head of Jakarta Manpower and Transportation Agency, announced to the cheers of workers waiting outside City Hall on Wednesday night.
He said that the decision was legitimate and in accordance with the law although employers' representatives walked out from the meeting.
"Any complaints, either from employers or workers, should be filed at the Manpower and Transmigration Ministry," Sukandar said.
Board member representing employers, Sarman Simanjorang, said that both the Indonesian Employers Association and the Indonesia Chamber of Commerce and Industry would not accept the decision.
"The decision made tonight was baseless. The numbers used were not in the methodology set by the government itself," he was quoted as saying by kompas.com on Wednesday.
Eddy Kuntadi, the chairman of chamber's Jakarta office, said that the decision was invalid because it was made without the consent of business representatives.
Kuntadi said that the business representatives had requested the wage be increased to 2.1 million rupiah, which was still higher than the basic cost of living.
"The governor was a former businessman and he should understand that this decision will hurt businesspeople and will likely have a bigger impact," he said.
According to Kuntadi, it was possible some foreign companies would decide to leave the city while some small and medium enterprises would close because of the increased wage.
"We are aware that we have to increase the minimum wage due to the country's strong economic growth, but the decision should have been made by considering businesses as well. A lot of entrepreneurs will not accept this decision," he said.
Deputy Governor Basuki "Ahok" Tjahaja Purnama lauded the decision on Wednesday, saying that it would be enough to cover living expenses in the city.
"Employers who cannot afford the minimum wage should write to us and we will follow it up in accordance with the law," he said.
Based on the existing Labour Law, business owners who fail to comply with the minimum-wage policy face a maximum of four years in prison, but transition time would be given to those who declared audited financial problems.-Asia News Network (November 16, 2012)
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