If today you are staying and have an ID card as a citizen of Jakarta, this is a good time to see so many changes in this capital. Among many things, one that impress me much is a recent news on provincial minimum salary or well known as UMP. It’s just been officially signed that by the next year, laborers will deserve a minimum wage at 3.1 million rupiahs per month.

The Governor of Jakarta Ahok after signing the new standard of salary for labors.

Probably, after some insurance and medical cost, a labor will go home happily when the salary day comes. I can imagine what the face will be like when telling his/her children that they will no more need to feel ashamed going to school just because they don’t have a new shoe.

I am not overrating.

For most families, an increase from 2.7 million to 3.1 million rupiahs is a big news. It takes four red paper money in hand. Each red paper nominaled by “seratus ribu”, and every “seratus ribu” is a very very expensive thing, nearly like a diamond for a beggar family staying under the bridge with river flowing and bring stingy things with it night and day.

This is not a slum. For them, this is a home (or … thought to be so)

Well … this will be a good time to make a bit flashback on what salary means for a living. For some, its change maybe just a matter of additional budgeted spent when shopping in malls or hanging out with friends, but to many other, it is as large as their whole living.

And today I’ve just found a very interesting writing from Sendy Filemon, the CEO of the Digital Financial Services KreditGoGo.com. What astonished me is that he looks like not forgetting the poor. He even knows and understand earnestly on the gap of these people living in this country, or this capital to be more specific.

I can not make a resume, so I decide to quote full of his elaboration here so you may get the whole of his perspective.

His ideas are response to the question in Quora, “Why does salary in Indonesia and Jakarta so low“? and he put the bullets straght at the rotten heart of this civilization. Am I overrating it? Perhaps. I myself assume that I did, but after reading his answer below, I can not stop reading and nodding (without unnecessary amen, of course).

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This goes back to when Indonesian was occupied by VOC or the Netherlands.

At the time, the Dutch need cheap laborers to work on the plantations and trading route. So they need to pay these people (slavery is sub-optimal since you degrade the dignity of both the supervisor and the victims) but you want to pay them so low that it will only feed them for that day and thus forcing them back to work the next day.

Another reason is political. To better control the majority of native indonesian, the dutch encourage a 3 tier society, where the europeans are at the top, chinese arabs and indians are in the middle, and native indonesian at the bottom. One way to make this happen is by limiting access to public service, another is income.

Now, during the independence, the cost structure of the government basically follows that of the dutch, with very low paid native civil cervants.

The nation leaders saw that it’s good to keep this system because they didn’t have a lot of money to pay civil servants when the country was just passing its independence and remember as a nation, Indonesia has been in a captive mindset for hundreds of years (either captive to the dutch or their local rulers), so they are used to a hand-to-mouth existence.

The traders, merchants, landowner and industrial class was also in the same mood, i’ve paid my workers pitiful salary yesterday why should i change now.

So that’s the historical background on why indonesian salary is so low.

And by the way, in addition to the captive mindset, the education, initiative, and productity level of the workers would discourage anyone from paying them european labor worker’s salary.

And from Independece, for decades Indonesian has been without a middle class. A middle class meaning people are educated and can reliably represent the owners interest in a company.

I think that up to the 1980s, there still a lack of middle class in Indonesia. There are basically 4 class of society: low level government official who has no access to corruption and stay poor, laborers and farmers who stay poor, government official who learn to compensate their meager salary with massive corruption, and private company owners. Managers are rare since most company are managed directly by the owners.

When more people become managers in the 1990s, this pattern of paying meager salary for indonesian continues.

But it give rise to rampant corruption in all sector of society, if in the 1960 and 1970s it was government officials who learn to corrupt, then it was private managers who then learn, but by more subtle means that government officials.

Some old money families I met manage by this creed “whether I give people low salary or high salary, people will steal. So I let them have low salary”.

In more modern times, this pattern continues.

For example, Jakarta has a city budget of US$ 5 billion, more than many top companies in Indonesia. Do you know that the official salary of Jakarta governor is less than $1,000 per month? Then what did his predecessor do?
a. They create a lot of non-salary official payments, fees for attending meetings, fees for sitting on a chair (they created a lot of chair), incentives from tax collection
b. They create a lot of “opportunity”. As a resident of Jakarta, I would estimate that at least half of the city non-employee budget is wasted on corruption. How do i know? The speed and quality of contruction being done now. Just around my house the city is revamping cannal walls with concrete, creating large drain trenches, and this is done in many parts of the city. I cannot help but wonder, the city had the money to do this in the previous governor’s terms, where did that money go?

Now, there are efforts to move Indonesian government salary to the Singaporean standard (i.e. Pay international market rate for government official and civil servant but zero tolerance for corruption and silly fees), but nooo, many Indonesians, especially old and powerful ones are just to use to having a corruptible system. For government official it presents massive upside, for businessman it provides a way to skirt regulation or change regulation per their business interest.

So why is Indonesia salary so low?
1. Historical reason of creating a hand-to-mouth existence for laborer that still continues to this day
2. The low productivity and skill of laborer (could be related or encouraged by the above).
3. A mindset of that expects and perpetuates corruption as means to cover for legitimate income, both in government and private sector.

Some negative comments arrive, saying that Sendy’s answer is negative, and then he argue furthermore.

Fact. It is fact that the minimum salary in Indonesia capital is less than $200 per month, it is fact that fresh undergraduate can earn less than $200 per month. It is fact than Indonesian civil servants is paid very low salary. It is fact that although there are people being paid high salary in Indonesia, most of them are in Jakarta (most likely middle class worker with time to read this answer) and doesn’t represent 1% of the total population. It is fact that I met very wealthy individuals who agrees that they are not providing living wages for their laborer and an income that doesn’t match their managers lifestyle and they don’t care how these people make up the difference.

I am Indonesian. I don’t like how poorly people is paid, someone ask why? i gave them an answer that provides a historical and contemporary background.

Look around you. Look how miserable other people are living their lives. These people are not reading Quora. They are busy trying to make ends meet for tomorrow. There are tens of millions of Indonesian facing this. But I am aware that there are people making very good wages. I am proud to say I am one of them. I am proud because I exercise a lot of effort to be where I am. But I am also aware that if the lottery of birth put me two houses down the road, I could be living minimum wage.

So if someone ask about “why Indonesian salary is so low?” Should I base my answer on the privilege indonesians that have sufficient English to interact in Quora or the tens of millions who are voiceless, downtrodden by a system that exist for hundreds of years with no one asking why the system exist, and are there often by not their own choice?

Jakarta, and Indonesia salary is so low due to a mix of history, convenience, and productivity issues.

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Among others, social welfare will always practically based on the increase number of the salary year by year. Dominated by labor worker on work-age population, people will highly value any governmental initiative to concretely set bigger amount on their take home pay account. Not to mention some objections by the employers or company owners, this is a real task, probably a sacred duty for the president and related ministers.

 

As for me, this answer needs no further explanation.

I just want to add another tiny (but maybe mighty) point that – in my point of view – contributes to make the low salary last very long.

As an Indonesian, more honest introspection will be a big help.
Yes, the salary is still low. Eventhough, there seems a slow but sure movement from a so-called middle class to earn and spent more money and investments.

But, as a whole, talking about two hundred and fifity four million people inhabiting Indonesia as its citizen, none will deny the fact that those main factors (colonialization, averagely ow productivity skill, and a tend-to-corrput mindset) still continue and infiltrate into almost every economical sources.

The sad thing is that it is made even worse when a big number of people are busy making things out of control in terms of so many conflicts based on racism and religious interest. Instead of accelerating to master necessary skill as labors, most workers in Indonesia spent times only by chitchatting and jabbering online.
Averagely Indonesian adults make it 9 hours a day in internet things.

 

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