Tough justice: new Jakarta governor to settle on controversial minimum wage
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Tough justice: new Jakarta governor to settle on controversial minimum wage

At a time when much of Indonesia’s media remains fixated on president Joko Widodo’s cabinet selection, a separate drama of much more immediate import to Jakarta’s poor has been quietly unfolding elsewhere in the capital.

Last week a tripartite forum of trade union leaders, employers’ associations and bureaucrats from the Jakarta city administration gathered to negotiate a new provincial minimum wage for 2015. The talks proved to be a baptism of fire for the newly empowered, straight-talking governor Basuki ‘Ahok’ Tjahaja Purnama, who angrily rejected workers’ demands for a 22.9% wage hike from Rp 2.4m ($197) to Rp 3m ($247) per month. The dispute is not over yet, however, since Ahok is not required to exercise his executive powers to set the new minimum wage until the end of this week, and it is plausible that the typically intractable governor might soon undergo a last-minute change of heart.

Ahok’s initially unyielding stance showed signs of softening towards the end of the negotiations, as it became apparent that he had be sent a flawed set of data by a separate governmental body, upon whose findings the Jakarta minimum wage is supposed to be based. The new governor now has only a few days left to decide whether to shun the erroneous data and submit to demands of the unions, or side with the powerful employers’ associations that have bitterly condemned the idea of raising Jakarta’s minimum wage for a third consecutive year.

Needless to say, for many of the capital’s poorest workers, the outcome of these negotiations will set the tone for the rest of Ahok’s governorship.

Erroneous calculations

Every year, Indonesia’s Central Statistics Body (BPS) produces a price index survey to try and determine the basic cost of living for a worker in Jakarta. This survey, ironically named the Decent Living Index (Kebutuhan Hidup Layak or KHL), represents the best efforts of the national government to analyse every single monthly expenditure that a low-paid worker might face in the capital, and make sure that all of these costs are neatly tallied in order to produce a precise recommendation for a commensurate minimum wage. This year’s KHL covered a grand total of 60 monthly expenditures – ranging from shampoo and toothpaste to instant coffee and powered baby milk.

Last week trade union leaders were able to scrutinise the KHL prior to the tripartite talks at Jakarta’s City Hall, and what they discovered was a document riddled with errors compiled by a team of ruthless statisticians who clearly have very little regard for the welfare of low-wage workers.

Among the most glaring anomalies featured in Jakarta’s KHL for 2015 are water consumption, meat consumption, ‘recreation’ and ‘savings.’ Each of these items has been quantified and priced by the arbiters of the Decent Living Index, but none of the resulting figures seem to bear any resemblance to the spending habits of Jakarta’s poor or the higher aspirations that each worker undoubtedly holds in the hope of a more dignified and prosperous future.

According to this year’s Decent Living Index, the average worker in Jakarta need only spend Rp 9,000 ($0.74) on ‘tap water’ each month. We can safely assume that the KHL’s ‘tap water’ category covers both water for drinking and water for bathing and washing, since the survey makes no attempt to distinguish between the two utilities. It is a self-evident fact that Jakarta’s tap water is not potable without first being boiled – a process that requires a continuous and costly investment in kerosene fuel (Rp 2,500 per litre) – and anyone who has ever walked into a shop in the capital will know that a paltry 74 cents can only obtain three medium-sized bottles of water. Rp 9,000, then, is simply an insufficient budget for even the most frugal worker’s monthly water requirements.

Said Iqbal, a delegate to Ahok’s negotiation table and chairman of the Confederation of Indonesian Trade Unions (KSPI), quite reasonably suggested that the Decent Living Index should include two separate categories for water, namely ‘bottled drinking water’ and ‘tap water for washing, bathing and flushing ones latrine.’ According to Iqbal’s calculations, both of these expenditures taken together – based on a monthly allowance of four gallons of drinking water and 16 cubic meters of tap water – would likely amount to a bill of around Rp 112,000 ($9.22) – twelve times the cost of the BPS’s ‘decent living’ figure.

Meat is another area where the BPS’s statisticians seem to have committed a serious methodological error, or else deliberately pulled a fast one on Jakarta’s workers. In the latest edition of Jakarta’s Decent Living Index, ‘meat’ is listed as a single, generic category, without any differentiation between beef, mutton, chicken etc. As we are all no doubt aware, each of these meats has a different market value, and poultry in particular is much cheaper than red meat. Trade unionists such as Iqbal and Dedy Hartono were therefore shocked to discover that the BPS’s statisticians had settled on a dubious aggregate figure for the price of meat in this year’s survey, based on the median value of both beef and chicken put together.

A kilo of beef in Jakarta should cost around Rp 95,167, whereas a kilo of chicken would set you back Rp 32,333. A kilo of generic, non-existent ‘meat’ should therefore cost around Rp 63,700, according to the folks at the BPS. This style of aggregation does not give a realistic picture of workers’ needs or spending habits, and the inclusion of chicken as the lower denominator seems designed to depreciate the KHL’s total meat expenditure, thereby keeping the resulting minimum wage accordingly low. Admittedly, the above formula might not be so objectionable if the BPS were willing to budget generously for a worker’s monthly fill of generic ‘meat,’ but this is clearly not the case.

The Decent Living Index allocates only 75 grams of ‘meat’ per month to each Jakarta worker, thus bringing the total meat expenditure per capita down to a meagre Rp 47,000 ($3.87). Just to give an idea of how contemptible a 75 gram meat ration should seem given the KHL’s supposed commitment to ‘decent living,’ consider that meat consumption per capita in neighbouring Thailand is estimated to be 2.2kg per month on average; whilst the average Malaysian is thought to get through 4.04kg of meat in an ordinary month. Clearly, the statisticians-cum-nutritionists at the BPS have taken great pains to ensure that Jakarta’s minimum wage workers do not receive a lion’s share of any meat – be it beef, chicken or otherwise.

Out of all the expenditures featured in Jakarta’s Decent Living Index, the two categories marked ‘recreation’ and ‘savings’ are perhaps the most disingenuous of the whole bunch. Indeed, it is still vaguely plausible that the BPS simply made some honest mistakes with regards to meat and water consumption, but it seems impossible to believe that a team of self-respecting statisticians could accidentally produce such shockingly inadequate budgets for ‘recreation’ and ‘savings,’ unless driven by an ulterior motive. According to this year’s KHL, a typical worker in the capital can enjoy ‘decent living’ on a monthly budget of no more than Rp 1,600 for recreational activities, which amounts to about 13 US cents to spend over a thirty day period. Said Iqbal rightly points out that Rp 1,600 can’t even buy a ‘Metro Mini’ bus ticket in Jakarta, let alone purchase some form of recreational fun. Iqbal suggests instead that the BPS should budget for a once-a-month cinema ticket, which could cost anywhere between Rp 25,000 to Rp 50,000 depending on the film and theatre.

Incidentally, Rp 50,000 is almost the amount that the Decent Living Index earmarked for a Jakarta worker’s monthly savings pot. If the KHL’s figures are allowed to stand without amendment, then this would mean that an avid film enthusiast on minimum wage in the capital would have to spend his every penny just to see a movie once a month. Even Ahok himself admitted that the BPS’s savings figure is an affront to Jakarta’s workers, though it remains to be seen whether the tough-talking governor actually cares enough to do anything about it:

Why is the savings rate pegged at just 2%; that 2% is not even equal to Rp 50,000 [per month]. Just imagine if you were a single guy with a savings rate of 2%, putting away Rp 50,000 per month. Say, that’s only Rp 600,000 per year: how are you supposed to get a beautiful wife; how are you going to get a house? It’s just impossible. [And] it’s not decent [living] is it? ( 23/10).

The road ahead  

Last week’s negotiations tested Ahok’s patience, and did much to undermine his self-proclaimed “logical approach” to the wage debate. At the beginning of the talks Ahok stubbornly insisted that there will be no change to the minimum wage beyond the recommendations of the Decent Living Index, yet as the talks progressed Ahok made one admission after another conceding that the BPS’s findings are largely erroneous. This puts the governor in an uniquely awkward position in the run-up to the announcement of the new minimum wage on November 1: Ahok can either revert to his original, recalcitrant stance and allow a flawed set of data to impoverish his city’s workers, or he can submit to the trade unions’ demands for a more accurate reassessment of Jakarta’s KHL and an inevitable increase in wages. I am tempted to say that the workers have logic on their side in this dispute, but then again Ahok is a hard-headed, former quartz tycoon, capitalist politician, who often seems to revel in making controversial decisions.

In any case, with this year’s KHL now widely considered to be an elaborate mess, one hopes that Ahok will do the logical thing and not base his decision on the KHL’s findings. Indeed, to do so would utterly squander potential working class support for his governorship, and would also provoke crippling strike action in the coming months. We know for a fact that Ahok does not want this to happen – mainly because street protests tend to exacerbate Jakarta’s already infuriating traffic jams – but the governor will have to reap what he sows if he insists on going head-to-head with Jakarta’s increasingly well-organised and emboldened trade union movement.