Not All Regions Follow Instruction to Maintain Minimum Wage

Kompas/Yuniadhi Agung

Manpower Minister Ida Fauziyah.

JAKARTA, KOMPAS — As of Friday (30/10/2020), as many as 28 out of 34 provinces have set the provincial minimum wage (UMP) for 2021 according to the Manpower Minister’s circular in which the minimum wage should be the same as this year. However, not all regions follow the instruction stipulated in the circular.

In the Circular (SE) Number M / 11 / HK.04 / 2020 concerning the 2021 minimum wage, dated 26 Oct. 2020, Manpower Minister Ida Fauziyah asked governors to maintain the 2020 minimum wage for 2021.

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The government considers the decision not to increase the minimum wages as a middle way to accommodate the interests of both employers and workers. The 2021 provincial minimum wage is scheduled to be announced simultaneously on Saturday (31/10).

Provinces that have raised the 2021 minimum wage, among others, are Central Java and Yogyakarta. The Central Java provincial administration announced Friday that it had set the 2021 minimum wage for 2021 at Rp 1,798,979 (about US$124), a 3.27 percent from Rp 1,742,015 this year.

From the dialogue it was decided to continue to follow Government Regulation (PP) No 78/2015 concerning minimum wage which determines the minimum wage based on economic growth and inflation.

Central Java Governor Ganjar Pranowo said the decision to raise the minimum wage was made following a dialogue with labor unions and entrepreneurs in the Regional Wage Council. From the dialogue it was decided to continue to follow Government Regulation (PP) No 78/2015 concerning minimum wage which determines the minimum wage based on economic growth and inflation.

According data issued by the Statistics Indonesia (BPS), the annual inflation as of September 2020 was 1.42 percent while the economic growth was 1.85 percent. Based on the inflation and growth figure, the minimum wage was increased by 3.27 percent. "Our minimum wage is not in accordance with the Ministerial Decree, but we need to clarify it complies with Government Regulation No. 78/2015. We are trying to stick to these two indicators of economic growth and inflation, ”said Ganjar.

In Yogyakarta, the local wage council has agreed to recommend an increase in the 2021 minimum wage by 3.33 percent in accordance with the Government Regulation (PP) No. 78/2015.

KOMPAS/PANDU WIYOGA

A number of workers leave the factory area during work hours at Batamindo Industrial Estate, Batam, Riau Islands, on Tuesday (22/9/2020).

The head of the Yogyakarta Manpower and Transmigration Office, Aria Nugrahadi, said that employers did not object the experts’ suggestion. "This decision was taken through deliberation and consensus. The 3.3 percent increase is in line with economic growth and inflation, "said Aria.

The president of the Confederation of Indonesian Trade Unions, Said Iqbal, was of the opinion that the 2021 minimum wage should not be set the same for all regions and sectors. If the increase was considered too high, it could be adjusted to the capacity of each region and industry, he added.

Industries and companies that cannot afford could not be forced to raise the wage.

According to Said, the provincial government has the prerogative power to determine the minimum wage without having to follow the Manpower Minister’s circular. Industries and companies that cannot afford could not be forced to raise the wage.

The director of the wages department at the Manpower Ministry, Dinar Titus Jogaswitani, did not respond when asked for his opinion regarding the decision of some provinces to determine the minimum wage not in accordance with the minister’s circular.

Ida Fauziyah said earlier that she hoped that the governors could use the circular she issued as a middle ground reference in determining the minimum wage.

Ida said the decision not to raise the 2021 minimum wage was a middle way in order to accommodate the interests of workers and employers in the midst of a difficult situation.

"We protect the wage, but we must also pay attention to business continuity," Ida said in Jakarta, on Tuesday (27/10). (AGE/NCA)