Friday, November 16, 2012

Mass Labour Protests In Indonesia Next Week

15 November, 2012
Source: ANN

Thousands of workers took to the streets in Purwakarta, West Java, in ugly protests yesterday that saw most roads closed.

The protests came ahead of planned mass demonstrations across Java next Tuesday, with 70,000 expected to rally in Jakarta alone.

Indonesians are demanding a rise in the minimum wage and a ban on employing contract workers - two problems they cite as barriers to improving their welfare.

Said Iqbal, one of three labour leaders representing the Alliance for Labour Unions in Indonesia (MPBI), said: "We are forcing, not asking, the government to amend the laws to limit (contract jobs) and implement a better wage system. There will be no compromise until there is a change or more transparency."

Labour groups are also denouncing comments by Sofyan Wanandi, chairman of the Indonesia Employers Association (Apindo), who said that 80 per cent of those who took part in strikes and demonstrations were hired to do so and were not union members.

The protests came despite Industry Minister Mohamad S. Hidayat's announcement on Monday that the government may raise the minimum wage to 2 million rupiah (US$207) a month, and that Jakarta's minimum wage may go up by 50 per cent.

The labour leaders' statements show a growing distrust of the government and increasing boldness on the part of workers to demonstrate for change.

A nationwide strike in early October crippled production at 1,000 factories, causing an estimated 1 trillion rupiah in losses, Apindo claimed.

These protests have been rising in frequency even as Indonesia posted strong growth and attracted a record US$5.9 billion in foreign direct investment in the third quarter of this year. Singapore was one of the top investors.

A survey by the Organisation for Economic Cooperation and Development September found that Indonesia's minimum wage is among the highest in the world relative to average salaries at 65 per cent. But labour leaders say it is not enough as the minimum wage is set based on an unmarried worker's needs, and the lack of monitoring allows many companies to breach the requirement and flout laws on limiting contract jobs.

Manpower Minister Muhaimin Iskan- dar has been busy talking to provincial wage councils and governors, who have the authority to decide on the minimum wage, to consider more variables such as the needs of dependants and estimated future inflation.

Aggressive action, such as workers forcing their way into factories to get others to strike, has unsettled many companies. Some Japanese and South Korean firms have sought help from their embassies to discuss the issue with the Manpower Ministry.

Yesterday's protests in Purwakarta are the first of several scheduled over the next few days.

On Saturday, MPBI officials will lead a meeting in Batam with about 50,000 workers. Next Monday, workers in Surabaya will take to the streets. On Tuesday, workers from industrial estates on the outskirts of Jakarta will march on the presidential palace and Parliament. Apindo says 23 companies have plans to suspend operations if demonstrations continue to be rowdy.

The International Labour Organisation's deputy director Michiko Miyamoto describes the labour situation as complex, but says the main issue rests with the implementation of the law.

"The biggest problem is the lack of clarity over the laws. Once this is resolved and the government shows the political will to implement this, workers and investors may be reassured."

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Minimum wages on the rise in ASEAN

Posted by Arno Maierbrugger on November 16, 2012

Several ASEAN countries have raised their minimum wages or will do so in the near future to adjust salaries to the rising costs of living and to provide the population

with higher purchasing power. However, businesses and investors claim that the wage hikes were a blow to competitiveness and would make setting up new businesses in the countries unattractive. Also, small and medium businesses would face the highest disadvantages, they argue.

The ASEAN countries with notable minimum wage hikes are Thailand, Vietnam, the Philippines, Malaysia and Indonesia.


Thailand has started to raise the minimum wage gradually in provinces from April 2012 with the target to achieve a nationwide daily minimum wage of 300 baht (approximately $10) by 2013 which would benefit around 6.9 million workers who are currently paid below 300 baht daily. For some regions in the country the new minimum wage means salary increases of up to 40 per cent. Government officials have tied the wage hike to the need to raise skill levels and attract more advanced industries to Thailand as rival countries seek to compete on labour costs, but critics say the wage policy will not help industry in the short term.

The Vietnamese Ministry of Labour in September has proposed to increase the monthly minimum wage from its current range of $67 – $96 to approximately $89 – $125, which would be an increase of around 33 per cent. The minimum wage increase proposal comes in light of the Vietnamese government calculations that current minimum wages only cover approximately 60 per cent of employees’ costs of living. Despite the extra financial burden of increasing the minimum wage, local companies have mostly supported the proposal.

This minimum wage increase proposal comes despite Vietnam’s current economic difficulties. As of August 2012, over 30,000 companies in Vietnam have declared bankruptcy. As a result, the minimum wage increase now has been postponed from its originally planned date of January 2013 to March 2013 to ease the burden on local businesses. However, if businesses continue to suffer financially through the end of 2012, the date for the wage increase may be pushed back as far as September 2013. Around 8.3 million people in Vietnam will receive the raise.

The Philippines

Starting this year, the Philippines has raised minimum wages by a cost of living allowance of about 15 per cent of the basic wage in Metro Manila, and other provinces are supposed to follow. Under the current system, daily minimum wages range from as low as $3.30 daily in retail or service establishments with 10 or less workers to as high as $10.37 daily for a non-agricultural worker in the national capital region.

Nevertheless, minimum wages in the Philippines are substantially below the poverty threshold. In the national capital region, the poverty line is $15 a day for a family of five, or 50 per cent higher than the existing regional wage rates. In addition, nearly 30 per cent of all businesses do not comply with the minimum wage rates.

The Philippine government has said it will dismantle the minimum wage system by 2013 and replace it with a two-tier scheme. This system will consist of a mandatory floor wage for new hires and low skilled workers as the first tier, and a productivity-based pay system as the second tier. A productivity-based pay system shall be issued in the form of wage advisories with industry-specific wage recommendations based on labour productivity growth, labour market conditions and business expectations, among others. The system will affect around 20 million workers.


Indonesia may boost the average minimum wage in 2013 as labour groups demand higher pay amid economic growth that has exceeded 6 per cent for eight straight quarters.

The Jakarta Wage Council decided on November 14 to recommend a massive 44 per cent increase in next year’s minimum wage for workers in the capital, much to the dismay of business representatives. If approved, this would mean Jakarta workers should next year receive no less than $230 per month. For the whole country, the government may raise the lowest required compensation to $208 a month.


Malaysia has in May 2012 introduced a minimum wage for the first time in a move to support low income households. Private sector workers in Peninsular Malaysia will receive a minimum salary of $297 a month from January 1, 2013, and workers in the states of Sabah and Sarawak will get $264. Companies in labour-intensive industries, such as the rubber sector, have already asked the government to defer the new minimum wage as their labour costs would rise by 15 – 20 per cent.

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Dell offers VSS to 700 Penang staff

Friday, November 16, 2012, 04.45 PM
By Marina Emmanuel

Computer maker Dell Inc is offering a voluntary separation scheme (VSS) to 700 of its Penang workers in a bid to cut costs and stay lean.

The company yesterday announced that it will stop shipping its notebook computers from Penang to the US, Canada and parts of South America.

Dell will, however, continue to export its laptops to Australia, New Zealand and South Asia from its Bukit Minyak facility on mainland Penang.

Besides Penang, Dell has eight other manufacturing plants scat-tered around the world.

In Asia Pacific, Dell's manufacturing plants include those in Xiamen, China and Chennai in India.

Apart from making notebooks, the company also produces desktop computers, servers and storage products, which are manufactured to orders for global customers.

"The 700 affected staff will include production operators, supervisors and managers," Dell Malaysia senior manager for corporate communications Jasmine Begum told Business Times.

Dell, whose investment presence in Malaysia spans 14 years, has a total headcount of 4,500 and two facilities in Penang - one in Bukit Minyak and the other in Bayan Lepas on the island.

The company also has a global business centre in Cyberjaya.

Jasmine said the affected employees will begin to part ways with Dell beginning January 2010 and the company expects to conclude the VSS exercise by the middle of the year.

"We will however continue to hire here," she added, "in line with the Malaysian government's call to enhance its employee base and take them up the value chain."

Read more: Dell offers VSS to 700 Penang staff

MTUC pushes for new retirement age

KUALA LUMPUR 09 November 2012: THE Malaysian Trades Union Congress (MTUC) is seeking urgent talks with the Human Resources Ministry following news that the new minimum retirement age of 60 will not be implemented in January.

This came after a ministry spokesman told the New Straits Times yesterday that it “definitely” would not be implemented in January although the Minimum Retirement Age Act 2012 had been gazetted on Aug 16.

The spokesman attributed the delay to unresolved issues surrounding the

implementation of the minimum wage scheme. He said this was to avoid burdening private sector employers should the minimum wage and minimum retirement age initiative be implemented together.
"That is why the ministry is taking precautions, keeping in mind the interests of employers as well."
He said the new retirement age could take effect at "another date next year, hopefully".

In an immediate reaction, MTUC president Mohd Khalid Atan said the congress needed to meet the ministry urgently to clarify speculation on the new retirement age for private sector workers.

He said MTUC leaders held a recent discussion with the ministry but were clueless as to the actual date of the implementation.
MTUC in July had called on the private sector to extend the retirement age from 55 to 60 years immediately, given the six-month wait for bills to be gazetted and implemented.

It said that in the meantime, thousands of workers reaching the mandatory age of 55 would be retiring. MTUC said it was concerned with these workers' status since they had made representations to it to seek re-employment.
Human Resources Minister Datuk Seri Dr S. Subramaniam said the eligibility for invalidity pension for Social Security Organisation members would also be raised from 55 to 60.

Read more: MTUC pushes for new retirement age - Top News - New Straits Times