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Jakarta Governor Fauzi Bowo has rejected calls from labor unions to boost the minimum wage for local workers.

Speaking at City Hall on Thursday, Fauzi said he had signed off on the new monthly minimum wage of Rp 1,118,009 ($120), a 4.5 percent increase on the current Rp 1,069,865, which had been agreed to by the City Wage Council.

“There are worker representatives on the Wage Council who were involved in the wage discussions and calculations,” he said.

About 2,000 workers from the Jakarta Labor Forum demonstrated outside City Hall on Tuesday to demand the city administration revise its decision, saying the wage was not enough to eke out a decent living in the capital.

They said the new wage covered only 84 percent of the cost of living in Jakarta. The figure established to cover 100 percent of a proper livelihood was Rp 1,317,710.

Mandala M Baru, a member of the Wage Council, said on Thursday that if the minimum wage was raised to Rp 1.3 million, companies would go bankrupt.

“With an increase like that, many companies would go bankrupt and many people would be put out of work,” he said, adding that the 4.5 percent increase was the maximum that could be implemented.

Mandala said it would be quite some time before officials could introduce an “ideal” minimum wage, adding that the economic structure of the city was not yet “modern” enough.

He said the modern economic sector struck a balance between the needs of employers and employees.

“An example of a modern sector is banking. They never have any protests, right?” he said.

Subagiyono, secretary of the Jakarta Manpower and Transmigration Agency, said if the minimum wage was higher than the proper livelihood figure, it would affect work opportunities.

“So the choice is between whether many people have jobs or many people are jobless,” he said.

The agency’s policy, he said, is to lower unemployment — and along with it poverty and crime — by ensuring that as many people as possible have work.

Subagiyono said there were other components to consider when setting the monthly minimum wage besides the cost of living figure, including the inflation rate, productivity, economic growth and the financial means of the companies.