Jakarta trade unions reject 10% minimum wage increase, threaten strike action
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Jakarta trade unions reject 10% minimum wage increase, threaten strike action

After another week of tortuous negotiations and a missed deadline on November 1, Jakarta’s newly-empowered governor – the outspoken Basuki ‘Ahok’ Tjahaja Purnama – is still yet to settle on a new minimum wage for formal workers in the Indonesian capital.

Last week Ahok floated the idea of a 10 per cent minimum wage increase for workers in Jakarta, which would have brought the minimum wage for 2015 to Rp2.7m (US$222) per month. This offer, described as Ahok’s “maximum” bid, was bitterly and unanimously rejected by Indonesia’s trade union leaders, who last month put forward a strong case for a 22.9 per cent wage hike during talks with the governor at City Hall.

The unions are now demanding that Ahok return to the negotiating table and set the minimum wage at Rp3m ($247) for 2015, threatening the capital be brought to a standstill by an “inundation” of street demonstrations and even strike action. In one such day of action last Tuesday, members of the Confederation of Indonesian Prosperity Trade Unions (KSBSI) held simultaneous demonstrations outside the Jakarta regional assembly (DPRD), City Hall, and the regional Jakarta Manpower and Transmigration Agency. Further demonstrations have been planned for this week, including a Congress Alliance of Indonesian Labour Unions’ (KASBI) march on the governor’s office and the national assembly scheduled for November 12.

A hard-headed governor with a “logical approach” to problem solving

This year’s annual wage-setting forum has deteriorated into an increasingly caustic and intractable feud between Ahok and Indonesia’s trade union leaders, who feel that their demands have been scorned, belittled and unfairly dismissed by the unscrupulous, hot-tempered governor. Sure enough, readjusting Jakarta’s minimum wage to accommodate changes in the cost of living and a year’s worth of inflation is never a straightforward process, but this year’s negotiations have been destined to unravel into something particularly ugly from the very beginning.

At the heart of the controversy is a botched price index survey known as the Decent Living Index (Kebutuhan Hidup Layak or KHL), whose findings are supposed to form an evidential basis for any changes made to the Jakarta minimum wage. Produced once every year by Indonesia’s Central Statistics Body (BPS) – a non-departmental government organisation – the KHL survey attempts to determine the basic cost of living for a worker in Jakarta by tallying a list of 60 essential monthly expenditures – ranging from fruit and meat to savings and ‘recreation.’ The sum total of these expenditures then doubles up a precise recommendation for a commensurate minimum wage, which the Jakarta governor dutifully brings to his negotiating table as a blueprint for further wrangling between employers’ associations and trade union leaders.

At face value, this might sound like a rational and democratic way to go to about structuring the wage debate: two opposing sides sit down at the negotiating table and proceed to bargain their way towards a mutually beneficial figure, whilst the guiding hand of a supposedly neutral, popularly elected bureaucrat endeavours to mediate fairly between the two adversaries. There is, however, one key pitfall to this seemingly watertight system: the efficacy of the tripartite talks largely depends on the accuracy of the underlying Decent Living Index, whose findings – for better or worse – will inevitably steer the debate towards a certain pre-conceived outcome. This is a crucial aspect of the wage-setting dispute that now seems to have been forgotten by much of Indonesia’s mainstream media, particularly after the official talks last month ended in a somewhat unspectacular stalemate. Hanif Dhakiri, for example, Indonesia’s newly-appointed Labour Minister, has already called on the unions to simply “move on” from the minimum wage issue, as if the gross inaccuracies of the Decent Living Index were merely a minor blight on an otherwise fair and square debate.

At risk of regurgitating more detailed points already put forward in a previous piece for Asian Correspondent, I think it is important to remind ourselves why the present wage dispute has proved to be so protracted and problematic.

The 2015 Decent Living Index for Jakarta stands accused of systematically misrepresenting the cost of living for low-paid workers in the capital, to such an extent that the tripartite talks could not possibly produce a fair, rational or – to take Ahok’s phrasing – “logical” debate. Indeed, the finished index was found to be so fraught with error that it should never to have been allowed to leave the annals of the Central Statistics Body, let alone find its way into the annual wage-setting forum at City Hall.

Just to give a quick idea of how fantastically inaccurate was this year’s survey, consider that Jakarta’s Decent Living Index came to a grand total of Rp 2.33m ($191), whilst the equivalent KHL survey for neighbouring Tangerang – a swampy, industrial satellite to the west of the capital – shot up to an extraordinary Rp 2.6m ($214). Even more dubiously still, consider that the sum total of this year’s Decent Living Index for Jakarta actually turned out to be ten dollars less than the minimum wage for 2014, (which is still pegged at Rp 2.44m ($201) per month pending Ahok’s decision). As Said Iqbal, chairman of the Confederation of Indonesian Workers Trade Unions (KSPI) subsequently asked: “Is it possible for Jakarta to have been hit by deflation?

If Ahok was really committed to ensuring a fair forum for the trade unions’ demands, then we could have expected the wage debate to begin with a mass dismissal of woefully inept statisticians, followed by earnest calls for this year’s Decent Living Index to be recompiled from scratch. Unfortunately, however, the rogue data contained in the unrevised document were still permitted to dictate the terms of this year’s official talks, much to the betrayal of Jakarta’s lowest-paid workers.

The real cost of ‘decent living’

As of last Friday, a long overdue adjustment to the Decent Living Index was pushed through by the Jakarta Special Region Wage Council (one of the many divisions within the city administration). Thanks to the belated inclusion of a daily ration of fresh coffee, instant noodles and a trusty tabloid newspaper, the sum total of Jakarta’s official Decent Living Index for 2015 suddenly leapt in value by 10 per cent – from Rp 2.33m ($191) to Rp 2.54m ($209) per month. Not only does this revision reveal how precarious and arbitrary is the threshold for ‘decent living’ in Jakarta, but it also has the crucial effect of offering the workers a slightly higher minimum price for their labour, yet without exceeding Ahok’s final offer of Rp 2.7m ($222) per month.

If we rewind two weeks, back to the time when angry an Ahok was sat at his negotiating table insisting that next year’s minimum wage should not exceed the recommendations of the original, unrevised Decent Living Index, then all of sudden his offer of Rp 2.7m appears to be a significant and benevolent change of heart. Moreover, as Ahok repeatedly pointed out last week, his Rp 2.7m figure even incorporates an extra Rp 160,000 to ‘cover’ inflation and forthcoming cuts to Indonesia’s fuel subsidy – which is something that evidently never crossed the minds of price checkers at the BPS. The goodwill gesture of an extra Rp 210,000 tagged on top of the original Decent Living Index seems, therefore, to have been used first as an attempt to placate the union leaders who demanded that more items be added to Decent Living Index, whilst at the same time acting as a sweetener to Ahok’s Rp 2.7m offer.

With a minutely tweaked Decent Living Index now conveniently at his disposal, Ahok has resolved to jettison his former “logical approach” to the wage dispute, and has instead turned to his acerbic tongue in a last-ditch effort to trample wider support for the unions’ demands. Perhaps the governor does not quite realise the magnitude of the putdowns he has levelled in recent weeks, but it certainly appears that Ahok is now attempting to smear the trade union movement into submission – as little more than a rabble-rousing mouthpiece for “egotistical” and greedy troublemakers, who would sooner see their employers “bankrupt” than be grateful for the governor’s magnanimous offer of a 10 per cent raise. I quote here from some of Ahok’s more obnoxious tirades of the last 10 days:

Just look at the workers’ demonstrations, [they] can buy really nice mobile phones and motorcycles, right? So [now] they’re nice and comfortable, but what will happen if their factories get shuttered? Just ask them what will happen? Or, for example, [what will happen if they] occupy [their factories] like before [in 2013]. Those who don’t want to stop [demonstrating] will have to be forced. [If not] it will be a criminal offence. So we have to be clear. . . (Tribun News 04/11)  

There are more real workers who actually want to go to work than there are those joining the demonstrations. If [their] companies go bankrupt and closedown, then what are [they] going to eat? Moreover, the Decent Living Index and the minimum wage has to be predetermined, [and] after that [the workers] can deal with their companies [if they want] a hefty wage packet. . . (Tribun News 05/11)

Maybe the minimum wage is going to be around Rp 2.7m. [But] honestly, if I was going demand [any higher, like a worker], then I would be asking for a salary of 5 billion rupiah. . . (Tribun News 05/11)

The callousness and irony of Ahok’s comments should be clear for all to see: this is a superrich, former quartz tycoon, who has taken it upon himself to mock and ridicule the legitimate grievances of some of the lowest-paid workers in his constituency, on the back of an undeniably flawed and unfair round of negotiations.

There can be no doubt that the trade unions’ demand for the new minimum wage to be set at Rp 3m is an eminently reasonable one. Wages for the lowest formal earners in Jakarta still lag far behind their counterparts in Bangkok (Rp 3.2m), Manila (Rp 3.6m) and neighbouring Kuala Lumpur (Rp 3.2m), even though the cost of living in each city is similarly taxing. Such discrepancies will have to be ironed out sooner or later – preferably before the opening of the ASEAN single market in 2015 – or else Indonesia will stand condemned for sticking to its outmoded ‘cheap labour’ policy of the Suharto era in attempt to woo investors away from neighbouring economies (and of course depress wages for the poorest earners).

I will finish by noting that a separate cost of living survey conducted in Pasar Blok A, South Jakarta, found calculated the sum total of a worker’s basic necessities for ‘decent living’ at Rp 3.05m ($250). This survey, produced by the Jakarta Special Region Wage Council, appears to have been totally disregarded by Ahok and the city administration, who are still content to use the BPS’s flawed Decent Living Index as their one-and-only, immutable guide to the dispute. It is on the basis of the Blok A survey that the unions are currently staking their demand for a minimum wage of Rp 3m ($247) per month.

Is it “egotistical” to want to be paid $247 per month, still less than a fellow worker potentially doing the exact same job elsewhere in one of ASEAN’s higher-tier economies? Well, Ahok certainly seems to think so. . .