In a virtual press briefing on Saturday, Manpower Minister Ida Fauziyah announced that Ministerial Regulation No. 18/2022 would introduce a new formula for calculating minimum wages for 2023. The minister authorized the regulation in response to a stalemate between labor and business over the issue of wage increases.

In the absence of the new regulation, Government Regulation (PP) No. 36/2021, an implementing regulation of the 2020 Job Creation Law, would have served as the basis for setting such wages.

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.

Popular

Ahok questions Agus' flood mitigation stance in first debate

K-pop group BTS to make comeback in February

Agus cash assistance plan slammed by Ahok, Anies