Indonesian footwear body to be penalised

Told members to delay paying minimum wages

CONCERNED about labour unrest in the country, President Suharto has ordered the Manpower Minister to take action against the Indonesian Footwear Association (Aprisindo) for telling its members to delay payment of minimum wages.

“Such an association deserves to be penalised because it does not give peace to the workers,” Manpower Minister Abdul Latief quoted Mr Suharto as saying after a meeting with him on Monday.

“The president has ordered me to take stern action against the association,” he said.

His order comes after unrest in Jakarta at the PT Hardaya Aneka Shoes Industries (Hasi), which produces Nike and other sports shoes. More than 10,000 workers went on strike twice last month demanding that they be paid the minimum wage.

Mr Latief, who noted that his ministry had so far recorded 76 labour strikes this year – a 33.3 per cent decrease compared to the same period last year, said that the strikes took place because employers were ignorant of the latest minimum wage rise.

His view was shared by the Indonesian Chamber of Commerce (Kadin).

“More than 90 per cent of labour strikes and demonstrations occurred because many companies have not yet implemented government regulations,” the chamber said last week.

The government increased the minimum salary by 10.07 per cent from April 1 this year. A worker in Jakarta now earns about Rp 172,500 (S$105) a month compared to Rp 156,000 last year.

It also introduced a rule requiring companies to calculate wages on the basis of 30 working days a month, abandoning the traditional practice of setting a basic daily wage.

But this was opposed by textile and footwear producers.

Mr Latief was quoted by The Jakarta Post yesterday as saying that the Manpower Ministry had allowed 276 garment and shoe industries to delay paying the latest minimum wage increase after a public audit showed they were incapable of doing so.

Aprisindo chairman Anton Supit said yesterday that under government regulations, labour- intensive industries were exempted from paying the minimum salary if they requested it and met several requirements.

But he said he never encouraged the association’s 172 members not to pay the minimum wage.

“I am shocked by the government action,” he said. “This issue has been blown out of proportion to what I said to help the industry.”

He said that it was not surprising that many firms did not pay the minimum wage.

“They could lose their competitiveness if they increase salaries and not match it with a rise in productivity,” he said. “That is the dilemma we are facing. We might get a situation where other countries will turn to Vietnam or China for shoes and clothing because labour costs are cheaper there. We will lose out in the end.”

There are 366 medium and large shoe companies in Indonesia, mainly in Jakarta. They produced 1.26 million pairs of shoes last year with a total investment of US$2.8 billion. Seventy per cent of sports shoes are dominated by four international brands: Nike, Fila, Reebok and Adidas.

Indonesia’s shoe export reached US$2.19 billion last year. Workers at PT Hasi said they welcomed Mr Suharto’s move to get Aprisindo to raise minimum wages.