JakartaPost-Nov 23, 2022
The government has issued new rules for determining minimum wages as labor and business have failed to find common ground. In a virtual press briefing on Saturday, Manpower Minister Ida Fauziyah announced Ministerial Regulation No. 18/2022, which introduces a new formula for setting minimum wages for 2023. In the absence of this regulation, Government Regulation (PP) No. 36/2021 on wages, which is based on the Job Creation Law passed in 2020, would have been the basis for setting next year’s minimum pay. Through the new ministerial regulation, the government caps the rate at which governors can hike minimum wages for next year at a maximum of 10 percent, and it gives governors, mayors and regents a few more days to announce the minimum wages for their respective regions. Under PP 36/2021, the announcements were due last Monday. Mayors and regents can set wages above, but not below the provincial minimum announced by governors. Indonesian businesses, particularly those represented by the Indonesian Employers Association (Apindo), have been calling for the government to stick with the formula of PP 36/2021 for determining minimum wage hikes. Labor unions, on the other hand, had challenged PP 36/2021 as they said it would result in a lower average minimum wage increase than PP No. 78/2015, which was the basic regulation before the issuance of PP 36/2021. “The minimum wage formulas in PP 36/2021 do not accommodate the socioeconomic impact [of inflation], as the minimum wage has yet to catch up with the price increases for goods,” Ida said when introducing the regulation. Under the new formula, next year’s minimum wage is the current year’s minimum wage plus an adjustment value. The adjustment value, meanwhile, equals regional inflation plus regional economic growth, but with the latter multiplied by a variable termed “alpha” that can range between 0.1 and 0.3, hence reducing the total. Read more at: https://www.thejakartapost.com/business/2022/11/23/new-minimum-wage-policy-earns-praise-from-labor.html.
