Companies Prepare to Flee as Minimum Wage Hikes Loom
30 October 2013 18:16 WIB
TEMPO.CO, Jakarta - The Indonesian Employers Association (Apindo) says that as many as 128 foreign companies in the Jabodetabek area are ready to leave Indonesia following the minimum wage hike of 15 to 20 percent in 2014. As many as 68 factories in Bogor, 20 factories in Tangerang, and 40 factories in Bekasi confirmed they would shut down operations in the country.
Apindo chairman Sofjan Wanandi added there are currently already some 65,000 unemployed workers in the Jabodetabek area due to factories shutting down. Investors that have fled the nation are mostly from Korea in the garment, shoe, and electronic sectors. Some Japanese investors that decided to leave were from capital-intensive industry that were prepared to replace workers with machines.
"Wage is the largest component in the capital-intensive industry. In the garment industry, wages can cover up to 30 to 40 percent of total production costs," siad Sofjan.
Sofjan said the minimum wage for DKI Jakarta next year is almost final at Rp 2.299 million, or up 15 percent from this year’s minimum wage. Other regions may follow in the footsteps of the nation’s capital or even raise their minimum wages higher by up to 40 percent.
MARIA YUNIAR | PINGIT ARIA | TIKA PRIMANDARI | RAHMA TW
