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Indonesia in catch-22 situation over wages
Jakarta Post, Sept 6, 2013
Indonesia seems unable to raise the wages of its workers without pricing itself out of the global-competitive market, according to a survey announced Thursday.
The wage hikes in recent years had not been accompanied by increased workforce productivity in Indonesia in contrast with China, where productivity has risen faster than the wage increases, a Centre for Strategic International Studies (CSIS) survey showed.
Indonesia’s average minimum wage rose by 5.5 percent between 2000 and 2011 but productivity only improved by 3.4 percent, while in China the figures were 7.2 and 10.1 percent, respectively. Vietnam, which Indonesia is also competing with to attract investors, has seen average minimum wages rise by 7.4 percent against 4.2 percent productivity.
“If we observe, other countries did not raise [the minimum wage] that high,” CSIS senior researcher Haryo Aswicahyono said in a public discussion on the labor and wage situations in Indonesia.
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Fast and Flawed Inspections of Factories Abroad
New York Times, Sep 1, 2013
As Western companies overwhelmingly turn to low-wage countries far away from corporate headquarters to produce cheap apparel, electronics and other goods, factory inspections have become a vital link in the supply chain of overseas production.
An extensive examination by The New York Times reveals how the inspection system intended to protect workers and ensure manufacturing quality is riddled with flaws. The inspections are often so superficial that they omit the most fundamental workplace safeguards like fire escapes. And even when inspectors are tough, factory managers find ways to trick them and hide serious violations, like child labor or locked exit doors. Dangerous conditions cited in the audits frequently take months to correct, often with little enforcement or follow-through to guarantee compliance.
Dara O’Rourke, a global supply chain expert at the University of California, Berkeley, said little had improved in 20 years of factory monitoring, especially with increased use of the cheaper “check the box” inspections at thousands of factories. “The auditors are put under greater pressure on speed, and they’re not able to keep up with what’s really going on in the apparel industry,” he said. “We see factories and brands passing audits but failing the factories’ workers.”
Read the full article here
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Government issues a circular as guideline of implementation of Minister Regulation on Outsourcing
Hukum Online, Sep 6, 2013
Manpower and Transmigration Minister Muhaimin Iskandar issued circulars as guidelines for the implementation of Permenakertrans No. 19 Year 2012 on Outsourcing. The circular which was made on August 26, 2013 was numbered SE.04/MEN/VIII/2013.
In the letter, Muhaimin hopes these guidelines could be used as a reference for the parties whom carrying out the delivery of the majority of its work to another company or commonly referred as outsourcing.
The minister outlining the guidelines in the appendix as many as 14 pages. The attachment also comes with 14 sample letters and forms that must be filled by the parties involved in outsourcing activities. In the appendix, the minister also gave the first definition of some terms that have previously been set in Permenakertrans.
Read the full article here (Article is in Bahasa Indonesia)
Read the Google Translate English Version here
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Indonesia lowers economic growth expectation to 5.9%
Antara News, Sep 3, 2013
Indonesia remains the top destination in the Southeast Asian region for corporate expansion, according to a survey released on Thursday, despite the many challenges companies cited in conducting business here.
The survey, carried out by the American Chamber of Commerce in Singapore (AmCham Singapore) and the US Chamber of Commerce, said corruption was “overwhelmingly” identified as the greatest drawback in Indonesia.
In a poll of 475 senior executives from US companies operating across Southeast Asia, 79 percent of respondents reported that their companies’ level of trade and investment in the region has increased over the past two years, and an overwhelming 91 percent expect it to increase over the next five years.
- See more at: http://www.asean-investor.com/indonesia-still-at-top-for-investment/#sthash.wqBXtyrU.dpuf
Indonesia has lowered this year`s economic growth expectation from 6.3 percent to 5.9 percent due to the global economic condition, said Coordinating Minister for the Economy Hatta Rajasa on Tuesday.
"The expectation of 6.3 percent is not realistic anymore. We may be able to achieve 5.9 percent growth if we manage to stabilize the Indonesian currency and repress the current account deficit," added the minister.
Earlier, Finance Minister Chatib Basri revealed that the government's stimulus package to keep the widening current account deficit (CAD) in check will cause the Indonesian economy to grow at a slower pace this year. "The economy will have to grow at a slower rate if we want to contain the current account deficit. Therefore, the government has projected economic growth for this year at 5.9 percent," he said.
Read the full article here
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Infrastructure boosts Indonesia competitiveness
Jakarta Post, Sep 5, 2013
The implementation of infrastructure projects planned by the government still need to be worked on, following the Global Competitiveness Index (GCI) report published by the World Economic Forum stating that infrastructure in Indonesia is improving.
Indonesia’s ranking jumped 12 places to 38th with an index of 4.53 in the GCI after declining for three years in a row, thanks to infrastructure improvements.
“I’m happy that the ranking went up. But the reality is that we still need to improve,” said Indonesian Employer’s Association (Apindo) chairman Sofjan Wanandi on Wednesday. “The infrastructure projects [mentioned in the report] are still plans, we can enjoy the results in the next two to three years,” Sofjan added.
Read the full article here
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Firms maneuver to survive
Jakarta Post, Sept 2, 2013
Several manufacturers are considering delaying the importing of their raw materials while others are having to increase the prices of their products in order to survive following the depreciation of the rupiah.
They are frantically maneuvering to minimize the impact of the crisis. Citing previous Mandiri research, Rino Bernando, an analyst with Bank Mandiri said wholesalers and retailers would face the impact within two months, while the textile industry would see lower production within three months.
Despite potential hardships in the coming months, giant textile companies have a slightly better outlook. Jakarta-listed textile firm PT Sri Rejeki Isman (Sritex), said it was enjoying a slight benefit from the faltering rupiah as earnings from exports could offset the spending on the importing of raw materials, both of which were conducted in US dollars.
Read the full article here
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Basuki Supports Raising the Minimum Wage as Living Costs Increase
Jakarta Globe, Sept 4, 2013
Thousands of workers staged a demonstration in front of City Hall to demand a monthly minimum wage increase of 68 percent in the Jakarta area and 5 percent nationwide.
Protestors said the minimum wage hike to Rp 3.7 million ($337) from Rp 2.2 million per month was in accordance with the real wage needs based on the latest government survey.
In response to the workers’ protests, Jakarta Deputy Governor Basuki Tjahaja Purnama agreed that workers could not rely on their Rp 2 million monthly salary to live in the capital. That’s why the Jakarta administration called on people who earned Rp 2 million per month not to live in Jakarta because they would not be able to have a decent life.
“I don’t want to see slavery in Jakarta. We will give an update in the next two weeks before the minimum wage is set. We will hold a meeting here,” he said.
Read the full article here
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