JAKARTA Jan 8 Indonesia's palm sector, the
world's largest producer of the edible oil, faces the risk of
wildcat strikes this year despite increasing minimum wages, a
trade union said on Tuesday, as employers eye redundancies and
benefit cuts to fund the hikes.
Both domestic and international plantation companies have
benefited from a large, young and cheap workforce that has
helped power Southeast Asia's largest economy to grow at more
than 6 percent in recent years.
However, last year saw a spurt in industrial disputes as
unions in many cities rallied to demand a greater share of the
benefits from the boom and protest against employers' use of
contract labour to skirt employment regulations.
To quell the unrest, provinces across the country offered
workers varying levels of increases in monthly minimum wages in
Palm oil firms have responded by talking about redundancies
or fewer employee benefits, such as free housing or subsidised
electricity and food, said Khoirul Anam, president of the
Indonesian Forestry and Allied Workers' Union (KAHUTINDO).
"Palm workers are quite cheerful about the increases but it
is not over or finished yet," said Anam, whose union has 126,000
members in forestry industries, including palm oil.
"Companies say the wage increases are not logical or are
outside their wage structure," he added. "Strikes could occur at
any time, should a company not wish to abide by the minimum wage
or as a consequence of reducing benefits."
Any industrial action by palm oil workers could hurt output,
which is forecast to hit 27 million tonnes this year, or exports
to top buyers India, China and Europe.
Palm oil is used mainly as an ingredient in food, such as
biscuits and ice cream, or as biofuel.
BIGGEST HIKE IN EAST KALIMANTAN
While the average minimum rate rise is less than 15 percent,
Anam said the palm-producing region due to implement Indonesia's
biggest such hike was East Kalimantan, on the island of Borneo,
with an increase of 49 percent, to 1.752 million rupiah ($180).
The differing scales of increases are prompting workers to
move to provinces offering bigger hikes, stepping up pressure on
plantation firms to offer equal pay regardless of location.
Only 25 of Indonesia's 33 provinces have approved the
increases in minimum wages, Anam said, which would make close
monitoring of implementation necessary from the end of January.
Palm plantations usually employ workers on renewable
contracts running from three months to a year, or through
subcontractors, he added.
The Indonesian Palm Oil Association (GAPKI), which
represents plantations, said it had received no complaints and
that industrial action was unlikely, as most firms now paid the
minimum wage, or more.
"With regard to the crude palm oil industry, there are no
complaints of protests from employees," said Executive Director
Fadhil Hasan, brushing aside the prospect of sudden strikes.
"The ones who fight for the increase in the minimum wage are
mostly workers in urban areas, such as the textiles industry in
GAPKI had participated in regional talks about the minimum
wage levels, Hasan added. "The increases are rational and we can
($1=9,667.5 Indonesian rupiahs)
(Reporting by Michael Taylor; Editing by Clarence Fernandez)