Jakarta, Kompas – Increases in the inflation rate is putting increasing pressure on workers’ real wages. Because of this therefore, the government must, as soon as possible, realise intervention programs that can indirectly improve workers’ welfare, such as the construction affordable housing for workers.
“Almost 40 percent of wages are spent on transportation and housing costs so if a worker could own their own home near to their place of employment, a larger portion could be saved. This approach is easier to undertake than pressuring companies to increase wages because not all companies are experiencing good business growth,” said Confederation of Prosperity Labour Unions (K-SBSI) president Rekson Silaban in Jakarta on Wednesday April 4.
Based on data from the National Statistics Agency, real wages in January 2008 declined in comparison with January 2007. Comparing the third quarter of 2007 with the third quarter of 2006, the real wage of cigarette manufacturing workers fell by 28.05 percent and garment workers by 13.07 percent.
In nominal terms, the average wage for workers in the garment industry was recorded at 762,817 rupiah per month or a fall of 7.02 percent compared with nominal wages for the third quarter of 2006.
Up until now, employers have paid workers based on the stipulations set by the regional minimum wage (UMR) as determined regional governments. The UMR is set at around 80 percent of the value of the proper necessities of life because of the current economic conditions.
Take the experience of Puji (39) for example, a textile factory worker in the Nusantara Cakung Bonded Zone in North Jakarta. Although his wage is 900,000 rupiah per month, he spends at least 400,000 rupiah per month to contract a 3 x 4 meter room in a boarding house in Pulo Gebang, East Jakarta, and transportation costs to and from work. As it happens, the minimum wage for Jakarta Special Province for 2008 was raised from 900,560 rupiah to 972,604 rupiah per month.
On the question of housing, the government launched the Housing Construction Acceleration Program for Workers Welfare (P5KP) on January 28, 2008. As many as 200,000 housing units will be constructed over a two year period for workers with an income of less than 4.5 million rupiah per month.
Market orientation
Indonesian Textile Association (API) executive secretary Ernovian G Ismy is of the view that the decline in real wages that is being experienced by many workers in the garment industry has occurred because of its orientation to domestic markets.
“Garment industries that are export orientated are still going okay, full order. But those who are orientating to domestic markets are in fact being progressively ground down,” said Ismy. In the case of the ready-made garment industry, workers’ nominal wages are trimmed when there is a decline in demand. A decline in production results in workers loosing overtime wages.
“Actually under such difficult conditions, the government needs to support industry in order that it is more competitive in the domestic market. If industry runs better, the welfare of workers will also be better,” said Ismy. (ham/DAY/lkt)
[Translated by James Balowski.]
