Debate Over Minimum Wage Continues

KOMPAS/RIZA FATHONI

DKI Jakarta Governor Anies Baswedan met workers who demonstrated at the DKI Jakarta City Hall, Monday (29/11/2021).

JAKARTA, KOMPAS — Debate regarding the 2022 provincial minimum wage of Jakarta (UMP DKI Jakarta) continues. The Indonesian Employers' Association (Apindo) has argued that Jakarta administration’s decision to revise the province’s minimum wage violated prevailing regulations, saying it plans to file a lawsuit through the State Administrative Court. Unions, however, support the decision and threatened to stage a protest if other regional heads did not revise their minimum wage.

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On 18 December 2021, Jakarta Governor Anies Baswedan revised the Jakarta UMP increase from 0.85 percent to 5.1 percent. The decision took into account a study by Bank Indonesia (BI) that projected economic growth in 2022 to reach 4.7 to 5.2 percent and inflation to be under control at 3 percent (2 to 4 percent), as well as a study by the Institute for Development of Economics and Finance (Indef), which projects economic growth of 4.3 percent.

However, the decision was made to revise the figure to Rp 4.64 million, up 5.1 percent from the 2021 UMP.

Previously, on 22 November 2021, the Jakarta administration decided to increase the UMP by Rp 37,749 (US$2.62) to Rp 4.45 million. However, the decision was made to revise the figure to Rp 4.64 million, up 5.1 percent from the 2021 UMP.

Apindo chairman Hariyadi Sukamdani in a press conference on Monday (12/20/2021) said that his side deemed the move a violation of prevailing wage regulations, especially Government Regulation No. 36/2021 on wages. The revision was also considered to be in conflict with provisions regarding a timeline that was set on 21 November 2021 at the latest to decide on the wage.

KOMPAS/WAWAN H PRABOWO

Apindo chairman Hariyadi Sukamdani

"The Jakarta administration unilaterally revised the 2022 DKI UMP without paying attention to the opinion of the business world, especially Apindo Jakarta, which is part of the Regional Wage Council as an element of entrepreneurs," said Apindo Jakarta deputy chairman Nurjaman.

According to Hariyadi, considering that the revision was not in accordance with regulations, his side had appealed to all companies in Jakarta not to implement the UMP revision. While waiting for the ruling of the State Administrative Court (PTUN) for a permanent and binding ruling, entrepreneurs are encouraged to follow Gubernatorial Decree No. 1395/2021, which was issued on 19 November 2021.

On a separate occasion, on Monday morning, Confederation of Indonesian Workers Union (KSPI) president Said Iqbal criticized Apindo's efforts to nullify the Jakarta administration’s decision.

According to him, this is evidence that the group did not believe that Indonesia's economic conditions are improving.

Referring to the economic conditions in 2020, which slumped to a contraction due to the pandemic, the average national wage for 2021 at that time was raised by 3.14 percent. Meanwhile, currently, as the economy is returning to a positive track, wages for 2022 on average is increased only by 1.09 percent nationally.

Meanwhile, a number of labor unions in West Java demanded that West Java Governor Ridwan Kamil revise the increase of the province’s UMK to 5 to 7 percent. If this is not fulfilled, the workers plan to stage a demonstration on 28-30 December.

When contacted separately, Indef executive director Tauhid Ahmad argued that the wage calculation formula should include elements of productivity level or sector growth, in addition to elements of economic growth and inflation.

KOMPAS/RIZA FATHONI

Representatives of labor groups give speeches during a demonstration in front of the DKI Jakarta City Hall Building, Monday (29/11/2021).

This formula provides a proportional increase, according to sectoral performance, so that it is more fair and predictable for both employers and workers. (BKY/HLN/TAM)

(This article was translated by Kurniawan Siswo)