Indonesia has announced its intention to propose a regional minimum wage
for ASEAN during a recent World Economic Forum event held in June in
Kuala Lumpur. Indonesian officials cited wage disparities between low
cost production hubs such as Vietnam and those economies with more
expensive labor forces, and expressed concerns that these differences
could result in a race to the bottom and ultimately lead to the
exploitation of workers. The specifics of Indonesia’s proposal are
expected to be released at the upcoming ASEAN manpower ministers’
meeting.
There has been considerable fanfare behind the idea of an ASEAN minimum
wage, with Cambodia and Vietnam among those showing support. However,
the extent of regional commitment remains to be seen as nations continue
to compete for capital inflows brought on by a number of pending trade
agreements and relatively competitive workforces. Questions also arise
over the current capacity of ASEAN as a whole to institute regional
standards of this magnitude.
