The new minimum wage setting process differs in the regions where the researcher visited. Based on Ministerial Decree Number 226, 2000 (Kepmen No. 226/Men/2000) and under the new employment law discussed later in Chapter IX, minimum wage determination was delegated to provincial offices. Moreover, ever since the increased freedom of labor unions after the ratification of ILO Convention Number 87 on Freedom of Association, the government also allowed much greater union involvement in the council in setting the minimum wage level. In Jakarta, for instance, the provincial wage council has the authority to set the minimum wage with the approval of the governor. Figure 5 . 10 shows the general step by step process of minimum wage fixing at provincial level. The diagram also includes the minimum wage policy stakeholders: trade unions, employers and the government. The government depicted in the diagram includes local as well as central government representatives at the local level. Even though most central government functions were delegated to local governments, some functions, such as the statistics office, remains under the central government's authority. Members of each stakeholder group are equally represented in numbers, with an additional representative from the reputed local university as chairperson.
Figure 5.10 Minimum Wage Setting Process according to the New Employment Law N umber 13, 2003
Step 1 : Recommends minimum wage level
Step 2: Approves CitylDistrict Minimu m Wage Council proposal
Step 3: Reviews and recommends CitylDistrict Minimum wage proposal submitted by District Head or City Mayor
Step 4: Approves district/provincial Minimum Wage Council proposal\3
Step 5: Implementation
Step 6: Monitoring compliance
District/City Wage Council
Composition: 1 . Employers association 2. Labor unions 3. Representatives from government agencies 4. University District Head or
City Mayor or Governor
Provincial Wage Counci l
(Provincial-level composition)
Provincial Governor
Enterprises
Local Manpower Office
West Java and Banten did not exactly follow the prescribed mInimUm wage setting process shown in Figure 5 . 1 0, although the provincial authority did set a provincial minimum wage by choosing the lowest minimum wage level among the districts/cities within the province. Minimum wages in these provinces are set by the district or city 1 3 Except for West Java and Banten
wage councils with the approval of the mayors or district heads, but without the approval of the governor. The West Java governor, through an official written memo (crudely described as radiogram), has delegated minimum wage setting to district or city offices 14. The city of Bogor even went so far as to set a sort of sub-minimum wages in 2003 for small and medium TGF (Textile, garment and footwear) firms in addition to the general minimum wages within the city, whereas the adjacent Bogor District applied a sub-minimum wage for non-manufacturing firms since 2002. Thi s process of wage setting differs from the stipulations of the ministerial decree where the governor has the authority to approve district as well as provincial minimum wages. There appeared to be speculation that the process was more politically motivated than merely a way of simplifying the approval process. This process has resulted in one trade union In Bandung refusing to sign an agreement on the minimum wage level in Bandung, though their representatives still attended meetings to discuss the minimum wage levels.
The most important and arguably the most time consuming step in the process is the setting of the minimum wage level. As early as July, the council would meet to discuss the minimum wage level for the start of the next year. Based on the criteria for the minimum wage level, the council would start discussing the minimum subsistence need for the next year. The council has to prepare the appropriate minimum wage level and recommend it to the final authority before the start of the next year because the new minimum wage is applicable from the 1 SI of January of the next year. To achieve that target, the council breaks down into teams who conduct price surveys of selected items at the designated local markets. Depending on the number of markets to be surveyed, the team consisted of at least one representative from each stakeholder. After collecting information on the prices of selected groups of items, the team would meet and discuss how best to calculate the value of the minimum subsistence needs (KHM). Thus far, the process of calculating the KHM normally proceeds without much argument. It is usually the next phase of the process when discussion on the minimum wage level starts.
As explained earlier, the KHM is not the only criteria in determining the level of minimum wage. It is often the trade unions who insisted that the KHM should be used 14 Unlike other provinces where districts need the approval of the governor to make minimum wage level official, districts and cities in West Java only need the approval of district/city heads. The provincial office still set their own provincial minimum wage, but the provincial minimum wage only reflects the lowest minimum wage among the districts in the province.
as the minimum wage level. It is likely that trade unions would refer to the promise the government made in 1 997 that the minimum wage would be based on the KHM. Trade unions often disregard or pay little attention to the other criteria. It is the argument resulting from the failure to reach an agreement which drags the minimum wage process on for some time, and in some cases, results in walk outs by the trade unions if negotiations do not proceed their way. Usually the state of the economy, and to a lesser extent, the conditions of local businesses dominate the discussion on the new level of the minimum wage. The researcher observed that if the minimum wage is far below the KHM, the employers have most likely won the day. If the KHM is applied as the new minimum wage, then it is likely the trade unions have won the day.
The next steps of the mllllmum wage process are mostly conducted by the local government. The governor, district head or mayor produce a binding approval letter based on the recommendation of the council. The local Manpower Office then disseminates the information on the new minimum wage to all stakeholders, as well as informs businesses and workers. The local Manpower office is also obligated to monitor compliance with the new minimum wage, although they can also ask trade unions to help them monitor minimum wage compliance because the local Manpower office has limited staff to perform such tasks. Those businesses who can not afford to pay the new minimum wage could apply for a delay in implementing by registering at the local Manpower office to have their case considered. The writer noted that the Manpower office would have knowledge on how the new minimum wage would affect business operations. Several officials explained that they would know this by regular visits to some firms and their evaluation of the businesses' ability to pay. However, a lack of manpower prevents them from visiting all firms that are affected by the new minimum wage.