The Provocative Drama of Indonesia’s Provincial Minimum Wage: A Comedy of Errors!
Jakarta, CNBC Indonesia – Well, folks, grab your popcorn because it seems like the Indonesian economic stage is set for yet another gripping performance! Ever since the announcement of Government Regulation No. 51/2023—because who doesn’t love a good government regulation?—employers are screeching for the 2025 provincial minimum wage (UMP) to stick to this thrilling plotline. The drama thickens as the workers, bless their resilient hearts, are not exactly popping the champagne in celebration. They’re more like preparing for a protest parade!
Let’s break this down, shall we? In this riveting Government Regulation, a complicated equation akin to deciphering the Da Vinci Code is laid out to determine the Minimum Wage. They’re throwing in inflation, economic growth, and a sprinkle of a mystery index (let’s call it α), which varies between 0.10 to 0.30. It’s like a mathematical buffet, and we’re all just waiting to see if we’ll get served the good stuff or just a meager slice of the economic pie.
So how does our wage pie look for 2024? Based on economic data – we’re talking about a riveting increase in DKI Jakarta of about 3.6% to a staggering IDR 5,067,381. Meanwhile, North Maluku and DI Yogyakarta decided to bring their A-game with increases of 7.50% and 7.27%, respectively. I mean, who doesn’t love a little competition, right?
The Clock is Ticking
According to Article 28A, the governors must circle their calendars for November 21 – and if it lands on a Sunday or a national holiday, they’re expected to magically conjure up a UMP decision a day early. It’s a bit like playing economic roulette, really. What are the odds?
Nurjaman, the head honcho of Apindo DKI Jakarta’s Manpower and K3 Division, didn’t hold back, expressing hope that the 2025 UMP will follow the grand manuscript of PP No. 51/2023. Sounds dreamy, right? But hang on, there’s a twist! With all this legislation and a sprinkle of constitutional chaos, they’re desperately vying for a stable climate that won’t chase off potential investment like a bad date fleeing your clutches!
Constitutional Court Shenanigans!
And what about the Constitutional Court? They fluttered their judicial wings and decided to grant the labor unions’ requests to review the infamous Job Creation Law, as if they were flipping through the pages of a soap opera script. Seriously, this decision is like giving workers a glimmer of hope while simultaneously warning employers to keep their calculators close! Who knew the law could be this dramatic!
It seems that out of this judicial cauldron, the message is clear: if wage policies aren’t well balanced, Indonesia’s investment appeal may drop faster than a hot potato at a game of musical chairs. As Nurjaman eloquently puts it, regulations behaving badly could spoil the party for everyone involved—workers, entrepreneurs, and, dare I say it, the government too!
In conclusion, as the clamor continues over the provincial minimum wage, we must commend the labor groups for keeping the heat on while also keeping a close eye on economic stability. Just remember, behind every wage negotiation is a group of workers hoping to secure a slice of the pie, while employers are just trying to keep the oven running without burning down the whole house!
So as we brace ourselves for the upcoming UMP decisions, let’s hope they spark a civil dialogue rather than diving into chaos. Because folks, when wages rise, we all agree it can be quite the comedy show—and I, for one, am all for lighthearted banter with a side of equity!
Thank you, and remember: when it comes to wages, may the odds be ever in your favor!
Jakarta, CNBC Indonesia – Employers are advocating for the provincial minimum wage (UMP) for 2025 to be calculated in accordance with Government Regulation (PP) No. 51/2023, which pertains to the amendments of Government Regulation No. 36/2021 concerning Wages, officially released on November 10, 2023. This crucial regulation came into effect immediately upon its publication.
Article 26 of the PP lays out a specific formula for determining the Minimum Wage, incorporating three vital variables: Inflation, Economic Growth, and Certain Indexes, which are represented with the symbol α. The values for these certain indices are established within a range of 0.10 to 0.30. It’s important to note that this new regulation has faced significant pushback from workers and labor unions concerned about wage adequacy.
Leveraging economic data from 2023, the formula indicates an anticipated increase in the UMP for 2024 of approximately 4%. In real terms, this means DKI Jakarta’s UMP is set to see a rise of 3.6%, amounting to an increase of IDR 165,583, bringing the total to IDR 5,067,381. For comparison, North Maluku is projected to witness a substantial 7.50% increase, while DI Yogyakarta’s UMP will see a rise of 7.27%.
According to Article 28A of PP No 51/2023, the provincial minimum wage (UMP) is to be determined by a Governor’s Decree, which must be made public by November 21 of the current year. In instances where November 21 falls on a Sunday or a national holiday, the UMP declaration must occur the preceding day.
Nurjaman, head of the Manpower and K3 Division of Apindo DKI Jakarta, emphasized the desire of employers for the 2025 UMP to remain consistent with PP No. 51/2023 despite the recent ruling from the Constitutional Court. “Our hope is that the determination of the 2025 UMP will still refer to PP No. 51/2023. If regulations remain unchanged, we might not need to set a minimum wage in 2025,” he remarked during an interview with CNBC Indonesia on Friday (1/11/2024).
He further explained that the Constitutional Court’s ruling mandates the establishment of a dedicated employment law, making it essential for wage determinations to be backed by appropriate regulations. “It is crucial not to hastily interpret the Constitutional Court’s decision,” he added cautiously.
Nurjaman also indicated Apindo’s commitment to closely examine every ruling made by the Constitutional Court. “We respect the legal process at the Constitutional Court and understand the importance of balancing the needs of workers with the realities of the business environment,” he stated.
However, he underscored that this ruling could have adverse consequences for Indonesia, potentially diminishing the country’s investment appeal. “Investment is crucial for economic growth, and regulatory frameworks must foster a healthy investment climate to stabilize and enhance the economy. If Indonesia loses its attractiveness to investors, it risks failing to hit national economic growth targets,” nurjaman warned. “This responsibility lies not solely with entrepreneurs but also requires government involvement and worker cooperation.”
He affirmed that Apindo would also assess how each judicial decision impacts various aspects of the industry, covering around 21 articles. “We will conduct a thorough analysis of the operational implications of these rulings, especially given the current global economic uncertainties,” Nurjaman noted.
Constitutional Court Decision
The Constitutional Court (MK) recently ruled in favor of many requests for judicial review relating to Law Number 6/2023, which pertains to the Determination of Government Regulations in Lieu of Law Number 2 of 2022 on Job Creation (Ciptaker Law).
This ruling pertains to case Number 168/PUU-XXI/2023, filed by various labor rights groups, including the Labor Party, the Federation of Indonesian Metal Workers Unions (FSPMI), and the Confederation of All Indonesian Trade Unions (KSPSI), as well as laborers Mamun and Ade Triwanto.
The Constitutional Court instructed the legislators, specifically the government, to promptly develop a new employment law that separates from the existing provisions in the Job Creation Law. This directive was reported on the official MK website on Friday (1/11/2024).
The key issue raised in this decision centers on wage determination as outlined in the Job Creation Law, particularly Article 88. The Court declared that Article 88 paragraph (1) contradicts the 1945 Constitution of Indonesia, asserting that wage regulations must include provisions that enable workers to earn a living wage sufficient for themselves and their families.
The Court also criticized Article 88 paragraph (2) of the Job Creation Law, which assigned wage policy determinations exclusively to the Central Government, recognizing instead the necessity of regional wage councils in formulating wage strategies involving local government participation. This provision was similarly deemed unconstitutional and lacking binding legal force without this interpretation.
The Constitutional Court concluded that the phrase “under certain circumstances” was unconstitutional and must be interpreted in light of various potential disruptions, including natural disasters or extraordinary economic conditions declared by the President.
Lastly, the Court ruled that provisions regarding wage agreements must explicitly involve negotiations between employers and either workers or labor unions within companies, ensuring lawful and fair wage agreements.
(dce/dce)
Watch the video below:
Video: MK Grants Part of Workers’ Demands Regarding the Job Creation Law
**Interview with Nurjaman, Head of the Manpower and K3 Division of Apindo DKI Jakarta**
**Interviewer**: Good afternoon, Nurjaman! Thank you for joining us today to discuss the recent developments regarding the provincial minimum wage (UMP) in Indonesia following the new Government Regulation No. 51/2023. It seems there’s quite a bit of tension around wage calculations for 2025. What’s your take on the situation?
**Nurjaman**: Good afternoon! Yes, the wage calculation has certainly stirred up a lot of conversations. Employers, including those I represent at Apindo, are hoping that the UMP will align with PP No. 51/2023 for 2025. We’ve always advocated for a stable and consistent regulatory framework, which helps us plan for the future.
**Interviewer**: Speaking of the new regulation, could you elaborate on the calculation formula? It sounds quite complex, involving inflation, economic growth, and those specific index values?
**Nurjaman**: Exactly! The formula considers inflation and economic growth, among other factors. The mysterious index α adds another layer as it varies from 0.10 to 0.30, which introduces some unpredictability in the calculations. This complexity really leaves room for interpretation, and we aim to make it as manageable and fair as possible for both employers and workers.
**Interviewer**: Workers have expressed concerns about this new formula and its potential impact on their wage adequacy. How do you respond to their apprehensions?
**Nurjaman**: I completely understand their worries. Proper wage adequacy is crucial for our workers’ livelihoods and overall economic health. Open dialogue between employers and labor groups is essential. It’s important we work together to create a balance that addresses their needs while ensuring that we maintain an environment where businesses can thrive. We are committed to examining the outcomes of judicial rulings and their implications on the industry.
**Interviewer**: Indeed, the recent Constitutional Court ruling has added another layer to the ongoing discussions. How do you think this will influence the wage determination process?
**Nurjaman**: The Court’s ruling is significant and requires us to tread carefully. It mandates that we have a dedicated employment law to guide wage determinations, which is a positive step for legal clarity. However, it also complicates expectations as we strive to align legislation with the needs of both workers and investors. If not managed well, Indonesia’s investment appeal might suffer, which consequences could be detrimental to our economic growth.
**Interviewer**: You mentioned the need for investment to foster economic growth. How can the government, alongside trade unions and employers, facilitate a more favorable business climate?
**Nurjaman**: It’s crucial for all parties to collaborate. The government must ensure that regulations encourage investment and aren’t overly burdensome, while also being attentive to labor standards. A cooperative approach can lead to sustainable benefits for all, creating a win-win situation where businesses flourish, and workers receive fair compensation.
**Interviewer**: As we approach the November 21 deadline for announcing the UMP, what are you hoping to see from the final decision?
**Nurjaman**: My hope is that the decisions made will be grounded in the realities of both the marketplace and workers’ needs. A collaborative approach should lead to decisions that satisfy economic expectations while ensuring fair living standards. Let’s create an atmosphere of healthy dialogue rather than conflict!
**Interviewer**: Thank you, Nurjaman! Your insights are invaluable as we navigate this complex issue. Here’s hoping for a positive resolution that benefits all stakeholders involved.
**Nurjaman**: Thank you for having me! Let’s keep the conversation going as we all work towards a balanced outcome.
