Manpower Minister Issues Circular on Minimum Wage
Date 16 Oktober 2018
Minister of Manpower Hanif Dhakiri on 15 October 2018 signed Circular Number B.240/M-Naker/PHISSK-UPAH/X/2018 on Data Dissemination of National Inflation Rate and Growth of Gross Domestic Product in 2018.
In the Circular addressed to all Governors in Indonesia, the Minister requested that the Governors shall set the Provincial Minimum Wage (UMP) in 2019 in accordance with Government Regulation (PP) Number 78 of 2015 on Wage. The minimum wage, according to the Circular, shall be announced simultaneously on 1 November 2018.
Hanif Dhakiri explained that based on the Government Regulation Number 78 of 2015, the increase of the 2019 minimum wage shall be equal to the value of inflation plus the rate of national economic growth, resulting in 8.03%.
“This figure is not set by Minister of Manpower, it is the data taken from the Central Statistics Agency (BPS) which shows that our inflation rate is 2.88% and our economic growth is 5.15%, so the combination of inflation and economic growth is 8.03%,” Hanif Dakhiri told the journalists after attending the Plenary Cabinet Meeting at the State Palace, Jakarta, Tuesday (10/16).
The data, the Minister continued, has been disseminated to the Governors who have obligation to set the UMP on 1 November this year. Therefore, Hanif Dakhiri requested that all Governors shall immediately process the stipulation of the 2018 UMP in accordance with the provisions of Government Regulation Number 78 of 2015.
Regarding the dissemination of the policy, Hanif Dhakiri said that employers and trade unions have understood the content of the Government Regulation Number 78 of 2015 which stipulates that the wage increase shall be based on economic growth and inflation. The Regulation, according to Hanif Dakhiri, aims to ensure that the employees will get a regular wage increase annually as well as to make the wage increase more predictable.
“There is no need for protest or demonstration, since the wage will increase regularly and Alhamdulillah (praise be to Allah) next year the wage will increase by 8.03%. The employers will be able to predict the wage increase in the coming year by looking at the trend of economic growth and inflation,” the Minister concluded.