Freeport Workers Union Settle For 40 Percent Pay Raise

Posted on Dec 14, 2011

Freeport the mining giant will finally able to start their operation again soon. The dispute between the companies and its worker union that has been going on for more than three months causing a considerable damage to the company bottom line, has finally reached a number that both parties can agree on.

The company agreed to increase its employee salary by 40% from USD 2 to USD 3 per hour for its lowest paid staff for two years. The agreement was signed in Jakarta and Freeport management represented by Armando Mahler, the CEO of Freeport Indonesia.

40 percent pay increase instead of 200 to 400 percent demanded

The 40% increase is actually pretty far from the workers demand of 200 to 400%. The employee is taking their cue from salaries received by Freeport employee in the US. Freeport management was only agreeing to a 35% increase but willing to step up its offer if the workers union ended its strike.

PT Freeport Indonesia spokesperson, Juli Parorongan confirms that both parties have reached an agreement. “What is left is only the actual procedure of the increase” she says. She wouldn’t elaborate further but believes a solution agreed by both parties is within reach.

Not everyone is happy though, the Indonesian Mining Association concern that this situation will set a precedent for other mining companies. “If this is agreed then a domino effect will start happening to other mining companies. Many workers union such as in Newmont, Nusa Halmahera and others are watching this and ready themselves for a raise too” said Syahrir AB, the Executive Director of Indonesian Mining Association.

Another destructive effect is that the inflation around the mining area will be sky rocketing. The already high price of basic needs in area such as Freeport mine will go up even further. “The price of staple food in Timika (where Freeport is) are already close to 10 times its previous price” added Syahrir.

This will create a huge burden for people that don’t work for the mine such as civil servant and others. “This will create social inequality which can lead to unruliness etc” said Syahrir.