BKPM supports five-yearly pay hike

JAKARTA. The Capital Investment Coordinating Board (BKPM) expressed its support to the idea of regulating the hike in labor wages for a five-year period.

"Basically, employers and workers want certainty. So, we suggest that a five-yearly increase should be formulated, and it should not be changed but with an annual increase based on the five-yearly formulation," BKPM Deputy Azhar Lubis stated here on Wednesday.

Speaking during a dialog themed "Investment for Workers," Lubis noted that employers needed certainty, so that they would be able to survive in the future.

On the other hand, workers also need certainty with regard to their wage hike in order to meet their needs.

"However, the employers still continue to discuss matters related to wages with the Remuneration Board every year," he remarked.

He pointed out that with the five-yearly formulation, the government could decide the value of the increase in labor wages every year.

"So, we can decide it now. The variables to be used as inputs for the formulation can be taken from economic growth and inflation data, which all people are already aware of," he explained.

After five years, the latest developments should be observed. This is intended to prevent the government from deciding the value of wages every year.

He noted that the policy to raise wages every year is one of the reasons behind several demonstrations, which eventually hindered the working process of the companies.

"Workers have the right to stage a demonstration. But, they should not turn anarchic and force those at work to join them in street demonstrations," he stated.

Further, employers in Indonesia's labor-intensive industrial sector are awaiting the formulation of a labor wage hike, which is to be shortly announced by the government.

President Director of PT Adis Dimension Footwear Harijanto affirmed that the employers need to know the extent to which the labor wages will be hiked since they have to decide about their investment in Indonesia.

"Employers need certainty. It does not mean they do not want salaries to be raised. They will accept if the salaries are increased, but such a hike should be predictable," Harijanto said while launching a labor-intensive investment program in West Balaraja, Tangerang, Banten, on Monday.

Harijanto hoped the increase in salary, whose quantum had yet to be formulated by the government, would be such that it creates more opportunities for the workers.

He emphasized that the minimum wage rate norms would act as a safety net for the workers.

Manpower Minister Hanif Dhakiri revealed that the government was still in the process of finalizing the workers' salary hike formula.

"Basically, we need to encourage salary hikes for two reasons. Firstly, the certainty that the salary is to be raised every year, and secondly, the certainty that the employers will receive notifications regarding the rise," he explained.

President Joko Widodo has acknowledged that wage is an issue that employers in labor-intensive industries must face.