This
week Indonesian Vice President Jusuf Kalla proposed an ASEAN minimum wage for
workers. According to the Jakarta Post, Kalla
made the proposal during a World Economic Forum meeting on ASEAN in KL:
Vice President Jusuf Kalla introduced
the idea amid concerns over a lack of protection for nationals of ASEAN member
states. "Vietnam very much supports what I have said about the need
for ASEAN countries to protect their citizens from exploitation," Kalla
said on Thursday as quoted by Antara news agency.
He said other ASEAN member countries
had expressed interest in pushing for a minimum wage for workers in the region.
Kalla said manpower ministers from ASEAN member countries would meet shortly to
discuss the issue. "We are in agreement. Cambodia has also agreed,"
he asserted.
Kalla added that the government did not
want large multinational companies in ASEAN countries to compete for the lowest
wages. "Competition is good, and so far we have not lost out due to low
wages because the raw material is the same, the factories too," Kalla
said.
I
am not going to debate here whether government-mandated minimum wages are
economically beneficial to workers, consumers or employers. However, the Indonesian proposal does raise
some ASEAN-specific issues which I’d like to discuss.
First,
would we have an ASEAN region-wide minimum wage, or would there be allowances
for the less-developed countries of Cambodia, Laos, Myanmar and Vietnam
(CLMV)? Kalla’s comments indicate
support from Cambodia and Vietnam, who presumably would want such allowances.
Second,
would the scope of the minimum wage only cover wages, or would benefits such as
retirement, severance, medical, leave, etc., also be covered? In other words, is the term “minimum wage” to
be taken literally or will it cover all aspects of worker compensation? Will there be different wage scales for
different sectors?
Third,
who would be covered? All workers in an
ASEAN country, including guest workers?
Or only ASEAN nationals? What
about ASEAN nationals who are in another ASEAN country but on an undocumented
basis? Or who are working in a special
economic zone?
Fourth,
how the workers ensure that their rights to a minimum wage are protected? Would they go to an ASEAN institution (not
likely) or an ASEAN member state’s government (much more likely)? Could they go
to dispute resolution or to administrative means? Who
would investigate? What sanctions would be
imposed on the employer? Would the workers be entitled to receive back
wages?
Fifth,
even if the enforcement process will be necessarily nation-based instead of
region-based, how will the ASEAN national agencies or courts interpret and
apply the ASEAN minimum wage documentation? Will they look at the negotiating
history, statements by government officials and the like?
All
of this leads to my final question, what legal form will the ASEAN minimum wage
take? Will it be the usual ASEAN
declaration of an aspirational nature, which might mean that the minimum wage
would be fully or partially unenforceable?
Or will it have more legal weight, which would make it more effective
but will require more legal and institutional infrastructure?
In
previous posts, I
have called labor mobility the “third rail of ASEAN” which politicians will
touch only at their peril. The ASEAN minimum wage proposal does not touch
this third rail, but it raises similar issues with similar potential controversies:
it’s not touching the third rail, but it is close enough to hear the
electricity humming down the line.
