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Govt releases 4th economic package, simplifying wage

October 15, 2015 - Source : http://www.thejakartapost.com/news/2015/10/15/govt-releases-4th-economic-package-simplifying-wage-system.html

The government has released the fourth economic package, focusing on helping the workforce survive layoffs through entrepreneurship as well as simplifying the annual wage formula to create better business certainty.

Coordinating Economic Minister Darmin Nasution said on Thursday that under the new policy the government would expand loans for small businesses (Kredit Usaha Rakyat/KUR).

"The main goal of this policy is to open more jobs. In line with that, we may help the laid-off employees open their own business," he said during the press release in the State Palace on Thursday evening, as quoted by kompas.com.

The government, Darmin added, would also assist the export-oriented small and medium enterprises’ (UKM) operation, in a bid to prevent massive layoffs and to support national exports and productivity amid the harsh business situation.

As for the businesspeople, the package provided them with a simplified formula in deciding annual wages, by counting inflation and economic growth figures only. Thus, potential investors would not hesitate in starting businesses, which means opening more jobs for the coming workforce.

"The state plays its part in providing a safety net through this formula, to assure that the employee will not fall due to low wages. While at the same time businesspeople have the assurance to start their businesses […]. We must consider the unemployed as well,” Darmin said.

Under the new policy, he further explained, the minimum wage would be decided based in the existing wage plus the inflation and economic growth figures.

For example, assuming that the 2015 inflation rate and the economic growth were both 5 percent, the 2016 minimum wage would rise by 10 percent.

This new policy would be effectively applied in calculating the 2016 minimum wage. “It will be used as the basis for calculating the workers’ cost of living index (KHL) [...]. We don’t want to waste time with bipartite negotiation,” said Darmin.

He claimed the new minimum wage formula was different from those applied in other countries.

"Conceptually, we can call it fair. Why? Because in another countries, they don’t put economic growth in the calculation because it is [considered] not the state’s role, but the businessmen and the investors’ role," Darmin asserted. (ags/bbn)
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