JAKARTA - Mass demonstrations are set to begin this week to protest against a new presidential regulation to cap minimum wage increases that will see workers getting a fraction of the pay hike they want.
Labour union leaders have vowed to hold a nationwide campaign beginning in Jakarta with 5,000 workers marching on Tuesday and some 30,000 workers by Thursday to demand up to 50 per cent in wage increases.
They say Indonesian workers have been underpaid for too long and such increases are necessary to keep up with rising living costs.
Mr Said Iqbal, chief of the Confederation of Indonesian Workers' Union, said: "We see this new regulation as a political compromise between 'black sheep' employers and the government in returning to the regime of cheap labour."
The labour unrest comes as Indonesians gear up for nationwide polls next year, amid rising prices.
Data released yesterday shows that inflation last month, at 8.79 per cent, was the highest since January 2009, largely pushed up by food and transport prices.
Market watchers warn that it could hit double digits by the year end, shrinking real income further, if policies are not adjusted.
This week's protests in the capital will see a smaller number than the 50,000 who marched on Labour Day this year. But it could be higher than the turnout at last October's protests, also calling for higher pay.
Observers say such protests reflect troubled ties among workers, employers and the government, whose system of deciding wage rises has broken down due to distrust and politicking.
Anxious to rein in workers and stabilise the workforce, the Manpower Ministry said it will sign a decree to implement the presidential regulation that caps any increase in minimum wage to a maximum of 10 per cent above inflation.
It could circumvent the power of local leaders to determine their locale's minimum wage, and could affect the outcome of negotiations for next year's wages, Manpower Minister Muhaimin Iskandar said late last week.
The move has been seen as the government bowing to pressure from business interests to keep labour costs low.
"The cost of living has been rising but wages have not increased much. Rent, transport and meals already make up more than the present (minimum wage of) 2.2 million rupiah (S$264)," said union leader Muhammad Rusdi.
Last year, Jakarta Governor Joko Widodo agreed to a 44 per cent pay rise for this year, from 1.5 million rupiah to 2.2 million rupiah a month.
Workers want Jakarta's minimum wage raised next year to 3.7 million rupiah, higher than Malaysia's newly implemented RM900 (S$350) monthly minimum wage in peninsula states and RM800 in East Malaysia states.
Economist Kodrat Wibowo said that may be difficult, with the economy forecast to grow by 5.9 per cent, the first time it will dip below 6 per cent since 2010.
Get a copy of The Straits Times or go to straitstimes.com for more stories.