LABOR & MINIMUM WAGES
In Indonesia, minimum wages is the monthly wage payable to labor. It is mainly consist of fixed basic wage that is stipulated by regional governor as safety net.
The latest Government Regulation No. 78 of 2015 regarding Wages (GR 78) introduces several important changes, notably those concerning the calculation of provincial minimum wages and the requirement that all employees in Indonesia be paid in Rupiah.
GR 78 implements the Article 97 of Law No. 13 of 2003 regarding Manpower, and repeals and replaces Government Regulation No. 8 of 1981 regarding the Protection of Wages.
The main points of GR 78 are:
1.Minimum wage calculation GR 78 introduces a new formula for provinces to calculate their minimum wage each year, beginning in 2016. The introduction of the formula should bring certainty to the annual calculation of minimum wage and help create a more reliable business climate.
2.The new formula is as follows:
New minimum wage = current minimum wage + [current minimum wage x (Inflation + % GDP annual increase during the year)]
3.Wages must be paid in Rupiah
The Article 21 of GR 78 requires that wages for all employees be paid in Indonesian Rupiah and does not differentiate between foreign and local employees.
4.Wage scale and structure
GR 78 requires employers to prepare a wage scale and structure for employees by taking into consideration the group, positions, years of service, education, and competence of employees. Employers must inform employees of this wage scale and structure, and GR 78 requires that a copy of the wage scale and structure be attached to company regulation registration or renewal applications.
|PROVINCES||MONTHLY REGIONAL MINIMUM WAGES 2017 (IDR)||MONTHLY REGIONAL MINIMUM WAGES 2017 (USD)|
|Nangroe Aceh Darussalam||2,500,000||188.0|
|Banten||2,127,113 - 3,331,998||159.9 - 250.2|
|Jawa Barat||1,433,901 - 3,605,901||107.8 - 271.1|
|Jawa Tengah||1,370,000 - 2,125,000||103.0 - 159.8|
|Jawa Timur||1,388,848 - 3,296,213||104.4 - 247.8|
|Yogyakarta||1,337,650 - 1,572,200||100.6 - 118.2|
|Nusa Tenggara Barat||1,631,245||122.7|
|Nusa Tenggara Timur||1,525,000||114.7|
Based on data above, it can be concluded that Jakarta became the province with highest minimum wage at USD 252,3 (IDR 3.355.750) per month. But several cities/regencies experience higher minimum wage than Jakarta, such as Bekasi regency minimum wage of USD 265.4 (IDR 3,530,438) Bekasi City USD 270.8 (IDR 3.601.650) and Karawang Regency USD 271.1 (IDR 3,605,272).