Indonesia to focus on employment in stimulus measures on Thursday : official

[JAKARTA] Indonesia will revise the way minimum wages are calculated and aims to make it easier for skilled foreigners to get work permits as part of moves to stimulate economic activity, an official in the presidential palace said on Tuesday.

President Joko Widodo's administration will announce changes in labour rules on Thursday, the latest in a series of measures rolled out in recent weeks aimed at reviving growth in Southeast Asia's largest economy.

Labour-intensive sectors such as manufacturing and mining have shed thousands of jobs in recent months, as they struggle with a weakening rupiah, faltering consumption and increasing minimum wages.

The changes coming to minimum wages and other labour rules are intended to give employers more certainty about their future labour costs, according to the senior official, who is not authorized to speak to the media.

From November, annual increases in minimum wages will be linked to economic growth and inflation data, rather than determined through yearly negotiations between unions, employers and local governments. "We should have only one formula nationwide," the official said. "The wage increase should reflect inflation to maintain purchasing power and living standards, and should reflect GDP growth to reward labour because they play a key part in promoting productivity and growth." On permits for foreigners, the official said that the philosophy is to make it hard for blue-collar workers to enter"but for white collar, for high-level investors, we'll make it very easy. The government understands perfectly there's a lot of complex but unnecessary regulation concerning working permits."

The government's previous policy announcements have included lowering energy prices and cutting red tape hindering investment and trade.

Thursday's set "will mainly focus on labour issues, mainly it's about the minimum wage," the official said.

Unions said they opposed the government's minimum wage changes and planned to take to the streets on Thursday in protest. "This policy erases the role of the unions in negotiating minimum wages," said the Indonesian Trade Union Confederation, one of the nation's biggest union with more than 1.4 million members.

Faced with rising food prices and a weakening rupiah, union workers have called for at least a 22 per cent rise in the 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 (US$198) a month.

REUTERS