Indonesian incomes: Something to think about
As Americans celebrate Thanksgiving, I am looking at the minimum wage in Indonesia.
The minimum wage differs in different parts of this huge country (the fourth largest country in the world in terms of population), but in Jakarta today the governor is expected to announce an increase — to Rp 1,529,000 ($170 U.S.) per month for next year.
Yes, $170 per month. Just imagine that.
The Jakarta Post said yesterday that the “current minimum wage for an unmarried worker with under one year’s work experience is Rp 1,290,000 per month.” At today’s exchange rate, that is $142 per month. That’s $4.73 per day (using a 30-day month).
Please keep in mind that these are Jakarta wages. The minimum is lower elsewhere.
So when I mention that I had a delightful lunch for less than $5, including a giant glass of fresh mango juice (at about $2 U.S.), be aware that the average worker here will not be eating in the same place where I ate. I’m paying about $2/gallon for gasoline (and the price is lower for anyone riding a motorbike, or even a cheaper car than mine, because the government subsidizes the price) — but that is a lot of money if you’re only making $4.73 per day.
Meanwhile, in today’s Jakarta Post, I saw a list of the richest people in Indonesia. Each one of the top 10 is worth more than $2 billion (in U.S. dollars). We talk about the income disparity in America, but the disparity between the top and the bottom may be much worse in the developing countries such as Indonesia.
This is why middle-class people here can have a maid. (I employ a full-time driver and a part-time maid.)
Read more about the minimum wage in Indonesia.
The low wages here make Indonesia attractive to foreign manufacturers:
Indonesia, Southeast Asia’s largest economy, has for the past three years enjoyed new investments and orders for textiles, garments and footwear, as many foreign companies have relocated their plants from Vietnam and China following the steep increases in labor costs there. (Source)
Go to the bottom of that story to see charts showing Indonesia’s revenues (2006–present) from production of clothing and shoes.