Minimum wage will automatically increase in 2019. This will lead to higher incomes and purchasing power but it is not without its consequences.
A manpower ministerial circular dated Oct. 15 stipulates that the increase will cover national inflation and economic growth. This will amount to 8.03 percent in 2019, comprising 2018’s inflation of 2.88 percent and economic growth of 5.15 percent. The increase occurs automatically every year as a result of a tripartite agreement.
Workers’ wage increase serves a good purpose, namely to ensure that workers have adequate livelihoods. In ensuring that the increase is in line with inflation and economic growth, the hope is that workers’ real wages will increase, as well. In turn, this wage increase is hoped to improve workers’ household spending and contribute to regional and national economic growth.
However, not all employers are prepared to increase workers’ wage as is stipulated by the government, as not all businesses book good performance year after year. This lack of preparation is most evident in the current economic climate of global pressures and uncertainty, as reflected in the rupiah’s declining value.
Next year, experts predict that the spectre of global uncertainties will remain. The International Monetary Fund (UMF) has reduced its predicted global economic growth due to the Sino-US trade war, rising geopolitical tensions in the Middle East and political and economic turmoil in the European Union, among other factors.
Amid such uncertainties, we wish for the domestic economy to solidify its growth by increasing domestic production and productivity to improve its competitiveness both in facing imports and in export markets.
Workers hold important roles in increasing companies’ productivity and production of goods and services and, in turn, national competitiveness. Improving workers’ productivity should not be the burdened solely of employers as the general public and state also benefits from it.
The government is responsible for improving workers’ productivity. This can be done, for instance, through training. We can take lessons from Germany as the country with the highest workers’ productivity in the world. There, a close link exists between education institutions and industries. Synergy between the two is built through internships at companies.
The government can also increase the competitiveness of goods and services without burdening businesses by providing workers’ bacis needs, such as housing, water, electricity, transportation and schools for their children at low costs.
Furthermore, the government needs to facilitate businesses by cutting down bureaucratic red tapes in licensing and by eliminating illegal levies. Such economic inefficiencies will be burdens on workers’ wage and for consumers.
We hope that the government can resolve these challenges for the benefit of employees, employers, the general public and the government itself.