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Low wages

While the rich in Jakarta spend their time shopping for designer goods made in Europe – Rolex is doing particularly good business here – the city’s impoverished are engaged in a daily battle to survive. Many workers only receive the minimum monthly wage, and as it is set at such a low level it is not even enough to allow them to meet their basic minimum needs. And foreign companies, which have built factories in industrial estates on the outskirts of the city, are more than happy to take advantage of the situation, citing low productivity as the main obstacle to higher wages. But this is a circular argument. What is the incentive to work harder, if you can barely afford to eat and clothe yourself?

In fact, the low wages for workers merely reflect a system in which the political and business elites are able to cream off abnormally high profits for themselves while denying workers their fair share. The exploits – or perhaps that should read exploitation – of the U.S. footwear producer Nike, for example, are well known. Rather than actually produce the footwear itself in its own factories, Nike instead subcontracts the production to local companies, and by doing so is basically able to absolve itself of any responsibilities since the employment conditions at the factories are determined by the local contractors and not Nike. Crafty, huh?

The hotel industry is another good example of how the system exploits the poor and powerless. In this industry, profitability is broadly determined by two variables: room rates and cost of labor. And while wages at five star hotels in Jakarta are much lower than in other countries, the room rates are nonetheless at international levels. The Hyatt Jakarta’s rooms start at 158 U.S. dollars a night, for example, which is only slightly lower than the rate at its hotel in Singapore where rooms start at 167 U.S. dollars a night. It doesn’t take a mathematician then to work out that these hotels must be making huge profits. But it doesn’t end there. A well-known luxury hotel chain once evoked the wrath of the Australian trade unions by placing Indonesian housekeepers at its Sydney hotel, paying them less than one-fifth of the wage that an Australian housekeeper would receive!

Click here to read part 4





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