Government to Exempt Hundreds of Companies from Minimum Wage Rise

By webadmin on 04:28 pm Feb 07, 2013
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Kunardy Lie is now chief country officer for Deutsche Bank in Indonesia. (Photo Courtesy of Deutsche Bank)

ID/Agusyanti, Dessy Sagita

Hundreds of companies will be exempt from paying their employees the new minimum wage to prevent bankruptcy, the manpower and transmigration minister said on Thursday.

“There are 941 companies requesting the delay of the minimum wage increase, we will grant about 80 percent of them, but please note that the delay was needed as a logical alternative rather than closing down those companies,” said Muhaimin Iskandar, the manpower and transmigration minister.

The announcement was made just a day after hundreds of workers demonstrated in Jakarta to demand the government enforce the minimum wage increase which was announced at the end of last year.

The monthly minimum wage of Rp 2.2 million ($227) is a hefty 44 percent increase from the 2012 standard. This prompted scores of businesses to apply to the city administration for an exemption from having to pay it.

Muhaimin argued that the government had a selective process in choosing the companies who really needed to delay increasing the wages, adding that a request was only granted if an agreement had been reached between the company and its workers, or if a company could prove, through financial reports, that it could not afford the new minimum wage.

He said 500 companies had already been granted a delay.

Said Iqbal, from the Confederation of Indonesian Trade Union (KSPI), previously said that the workers would not stop demonstrating as long as the government continued to protect companies by letting them escape their responsibility to pay the minimum wage.

Said said companies requesting the delay should be publicly audited to prove they really needed to be exempt.

“We have sent our legal warning to the governor of Jakarta, Banten, West Java, Central Java, and Riau Islands, to remind them that only companies that have been audited can be exempt, if they ignore our warning we will bring this case to the State Administrative Court (PTUN),” he said.