JAKARTA Oct 17 Thousands of Indonesian workers
took to the streets of the capital on Thursday, demanding the
government raise wages and adding to fears that labour costs in
Southeast Asia's biggest economy are becoming uncompetitive.
About 7,000 members of the country's largest labour unions
marched through the centre of Jakarta to the presidential palace
to press their case for a 50 percent increase in the minimum
wages and improved social welfare.
The demands add to pressure on President Susilo Bambang
Yudhoyono to improve the lot of low income workers ahead of next
year's parliamentary and presidential elections.
His government has said it would announce an
inflation-linked basket to set minimum wages but manufacturers
worry that rising costs are already threatening to make
Indonesian products less competitive.
"For sure, some investors are worried that the government
will give in like they did last year," Sofjan Wanandi, head of
the Employers' Association of Indonesia (APINDO), told Reuters.
"Everyone understands that it's totally unsustainable for
business because we had to lay off thousands of workers
especially in the labour-intensive industries. This year, we
have hope that the government is more serious about protecting
The government-set minimum wage rose 44 percent last year in
greater Jakarta, where the bulk of the country's factories are
based. The mininum wage in greater Jakarta is on average 1.9
million rupiah ($172) a month.
Despite years of some of the world's fastest economic
growth, nearly 40 percent of the population live on about $2 a
day, and the gap between the rich and the poor is widening, an
issue that is likely to top the election agenda next year.
Economists say that they are concerned the government will
buckle to populist demands to win votes and shy away from any
serious economic reform to help counter a slowing growth.
"The government should be on the workers' side," said Yana
Santhia, a 36-year-old worker from a textile factory outside
"The workers are suffering because prices have gone up,
above what we can afford ... But so far the government has only
prioritised policies that support the business model of foreign
Inflation has jumped to 4-1/2 year highs after June's sharp
increase in fuel prices, while interest rates have been pushed
to their highest in almost 4 years in part to defend the fast
falling rupiah, Asia's worst performing currency this year.
The government has said it plans measures for
labour-intensive industries such as textiles to prevent layoffs.
But it has yet to implement the measures and there is widespread
concern that Indonesia's manufacturing industries are losing out
to more competitive neighbours.
A presidential spokesman declined to comment when asked how
the government intended to respond to the latest demands.
Union leaders said they planned more protests in the next
few weeks, including a national strike in late October.
(Editing by Jonathan Thatcher and Robert Birsel)