Workers across Indonesia have been holding demonstrations in recent weeks in support of a 50% increase in the minimum wage in 2014. This comes on the heels of gaining a 40%+ minimum wage hike in 2013. That’s a lot for an employer to bear and for most foreign-owned businesses in Batam and Indonesia a game changer, given that labor costs are a key reason companies put their manufacturing operations in Third World countries like Indonesia. A number of companies packed up and moved after this year’s wage hikes.
The governments, both local and national, this year are taking a much more conservative approach, offering minimum wage increases in the 10-12% range. This has not set well with the labor unions. Just this week, demonstrations paralyzed roads in Batam and shut off access to the airport, simply because the local government had not yet announced what the wage hike will be (but expecting it will be in the 10-12% range).
Batam’s current minimum wage is about US$210 a month, just so you know. In many parts of Indonesia, it is much lower, so I can understand how the workers feel. But another wage hike of 40-50% will surely result in tens of thousands of these protesters losing their jobs, as their employers pack up and move to Vietnam or the Philippines or some other low-wage country.
Here is a picture from the local paper of Batam’s main artery during Thursday’s demonstrations. This road also leads to the airport. Also, the protesters often go into the businesses, demanding that employees leave work to join the crowd, with the business owners usually just closing for the day. But the protesters who leave work or are let out for the day still get paid.