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Indonesian employers resist workers' calls for higher wages
September 1, 2015 / 9:42 PM / 2 years ago

Indonesian employers resist workers' calls for higher wages

JAKARTA (Reuters) - An Indonesian employers association labeled workers’ demands for steep annual wage hikes as “unrealistic” on Tuesday, and warned there could be more layoffs at companies struggling amid a slowdown in Southeast Asia’s largest economy.

An Indonesian trade union supporter sits behind razor wire as he attends a protest outside the Presidential Palace in Jakarta September 1, 2015. REUTERS/Beawiharta

Labor-intensive sectors like manufacturing and mining have shed thousands of jobs in recent months as economic growth in the second quarter slowed to its weakest pace in six years.

“The economy is slowing and companies all over the country are already either closing down or cutting jobs,” said Hariyadi Sukamdani, head of the Indonesian Employers Association.

“And this could get worse if the annual wage increase is too high,” he said, adding that firms in the association had cut 50,000 jobs since January.

Thousands of workers marched in several cities on Tuesday to protest layoffs and call for higher wages as they contend with rising food prices that made Indonesia’s annual inflation stay above 7 percent in August, the highest in the region.

Central Jakarta police chief Hendro Pandowo stands next to razor wire as Indonesian trade union workers hold a protest outside the Presidential Palace in Jakarta September 1, 2015. REUTERS/Beawiharta

Union leaders have called for at least a 22 percent rise in minimum wage in the capital Jakarta, which is seen as a bellwether for the rest of the country. Jakarta last year saw a rise of 11 percent in its minimum wage to 2.7 million rupiah ($191.56) a month.

Indonesian trade union supporters stand behind razor wire as policemen guard in front of the Presidential Palace in Jakarta September 1, 2015. REUTERS/Beawiharta

Annual negotiations are getting underway between workers, employers, and local administrations to determine minimum wages later this year.

Unemployment in Southeast Asia’s largest economy stood at 5.81 percent in February, according to official statistics, but analysts say that doesn’t cover the informal sector and the real figure could be much higher.

“We realize economic conditions in Indonesia are not very good at the moment, but the government needs to realize it’s the workers and poor people who get hit the hardest,” said Bambang, a Jakarta factory worker who had participated in the rallies.

“We are the ones who need to be protected.”

Writing by Kanupriya Kapoor; Editing by Randy Fabi and Simon Cameron-Moore

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