Rethinking Labor Relations and Wage Policy

KOMPAS/STEFANUS ATO

Dozens of Bekasi City workers held a demonstration at the Bekasi City Government Office, West Java on Monday (12/4/2021) morning. They asked the local government to oblige the company to pay the the Idul Fitri bonus (THR) in full.

The government will require all companies to pay the Idul Fitri holiday bonus (THR) in full this year, regardless of the COVID-19 pandemic’s impacts.

According to Manpower Ministry Circular No. M/6/HK.04/IV/2021 on the 2021 Idul Fitri holiday bonus, the THR must be paid by all companies to their employees seven days before Lebaran. The amount of the THR is to be equal to one month of wages.

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Companies that are severely affected by the pandemic are given a chance to discuss this matter with their employees, mediated by their respective local government, including the governor, regent or mayor. The responsibility to monitor the implementation is delegated to the local government.

Companies that are severely affected by the pandemic are given a chance to discuss this matter with their employees.

The regulation provides certainty for workers over their right to receive the THR, as well as an opportunity for them to meet their Idul Fitri needs. Worker spending will help the economy recover from the adverse effects of the pandemic. On the other hand, some employers will struggle to meet their obligations to employees. To meet their obligations, employers will need to take out short-term loans from banks or other financial institutions. Various incentives such as tax cuts or electricity subsidies could be provided to avoid bankruptcy.

KOMPAS/RADITYA HELABUMI

A number of office employees leave the office building during recess in the Setiabudi area, South Jakarta, Monday (1/3/2021). In this year\'s Eid, the government requires entrepreneurs to pay the Idul Fitri bonus on time.

The COVID-19 pandemic has brought many changes to all sectors, particularly in relation to business models and wage policies. During the fall of the Berlin Wall, we learned how West Germany transformed its economy and wage system to avoid complications resulting from unification with East Germany, to counter the effects of cheap labor from East Germany on the welfare of workers from West Germany. In Japan, we also saw the rise of temporary or part-time workers after the 1990s property crash.

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For the post-pandemic recovery, we should rethink our labor-relations system, productivity assessments and wage policies. One thing that has caught everyone’s attention is the rise of the sharing economy, as well as the growth of the digital economy. Work in the future will become less reliant on the traditional office model.

In practice, the sharing economy may force us to think about the gap between the salaries of the top employees and employees at the bottom of the hierarchy. Employees should be “humanized” in order to motivate them to work more productively and instill a sense of belonging within the company, which in turn will increase the company’s overall productivity and profits.

This article was translated by Lionel Priyadi.