VZCZCXRO3912
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJS #0122 3571059
ZNR UUUUU ZZH
R 231059Z DEC 09
FM AMCONSUL SURABAYA
TO RUEHJA/AMEMBASSY JAKARTA 0498
RUEHC/SECSTATE WASHDC 0508
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBY/AMEMBASSY CANBERRA 0227
RUEHWL/AMEMBASSY WELLINGTON 0195
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHJS/AMCONSUL SURABAYA 0521

UNCLAS SURABAYA 000122 
 
SIPDIS 
 
DEPT FOR DRL/LAB JUNK 
DOL FOR DOL/ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON ID
SUBJECT: EAST JAVA MINIMUM WAGE LEVELS DISPUTED 
 
This message is Sensitive but Unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary:  Local governments revise the monthly minimum 
wage on an annual basis.  Revisions are based on annual cost of 
living surveys conducted by Wage Councils.  The Wage Councils 
represent government, business, labor, and academia.  In East 
Java, labor is concerned that the 2010 minimum wage is too low. 
The East Java government plans to introduce a tiered minimum 
wage system in 2011.End Summary 
 
¶2. (SBU) Due to decentralization, local governments at the city 
and regency level determine the monthly minimum wage.  The 
minimum wage is re-evaluated annually.  Each regency or city has 
a Wage Council that submits a proposed minimum wage to the mayor 
or regent for review.  The Wage Councils perform an annual cost 
of living survey to determine the proposed minimum wage.  The 
survey focuses on the price of 46 goods and services at several 
low-cost markets in the regency or city.  The list of goods and 
services considered in the survey is mandated by national law. 
The survey focuses on the cost of living for an individual. 
Mayors and regents submit the suggested wage to the provincial 
governor for final approval.  While regents and mayors will 
occasionally alter the Council's proposal, or even choose 
between competing proposals that come out of the Council, 
governors generally approve regents' and mayors' suggestions. 
 
¶3. (SBU) The Wage Councils consist of representatives of 
government, business, labor, and academia.  While there is no 
regulatory requirement regarding the number of members on the 
Council, by law, the ratio of government, business, and labor 
representatives must be 2:1:1. There is no restriction on the 
number of academics on the Council.  The relevant government 
institutions choose the government representatives, local 
business associations choose the business representatives, labor 
union organizations choose the labor representatives, and the 
mayor or regent chooses the academic experts.  Council members 
serve for three-year terms. 
 
¶4. (SBU) The provincial government announced the 2010 minimum 
wages for East Java in November.  Wages are scheduled to 
increase in every city and regency in the Province.  The 
increase varies from 1% in Magetan Regency to 20% in Pamekasan 
Regency, as compared to the 2009 wage.  The highest wage 
continues to be in Surabaya City, at $109 per month.  The lowest 
wage, $66 in Pacitan Regency, is the lowest in Indonesia.  The 
chairman of the East Java Business Association (APINDO), Alim 
Markus, said that APINDO accepted the minimum wage increases 
since the process followed the proper procedure. 
 
¶5. (SBU) However, the East Java Labor Alliance (KASPI) has held 
demonstrations protesting the 2010 minimum wage as being too 
low.  Jamaludin, the coordinator for KASPI, said that his 
organization performed an independent cost of living survey and 
found that the proposed wage for Surabaya should be $120 per 
month.  He also said that the average 2010 minimum wage in East 
Java, at $83, is much too low when compared to Jakarta's average 
of $118 and West Java's average of $90.  Syaiful Aris, the 
director of Surabaya Legal Aid, argued that the minimum wage 
formulation frequently does not accommodate labor's interests 
because of the low number of labor representatives on the 
Council. 
 
¶6. (SBU) In an effort to address these concerns, the East Java 
governor is planning to apply a tiered system to determine the 
upcoming 2011 minimum wage. Under the new system, there will be 
minimum wage tiers based on the type of job and the education 
and skill levels of the employees.  The wage at the lowest tier 
would be based on the current minimum wage levels.  The Vice 
Governor of East Java, Saifullah Yusuf, said that this tier 
system will address the concerns caused by the current system. 
However, Jamaludin expressed concern that, under the new system, 
the lower tier wages would fall behind increases in the cost of 
living.  He pointed out that many workers in East Java are 
uneducated and unskilled. The East Java Manpower Department's 
data shows that 60% of East Java's work force has an elementary 
level education, or lower. Jamaludin said that the government 
should remember that the minimum wage is part of government's 
social program and should be based solely on the cost of living 
and not on the skill or education level of the workers. 
 
MOBLEY