Indonesian Goverment Wants to Limit Regional Minimum Wage Increase
Indonesia's government will make a new government regulation that foresees the minimum wage increase in all 33 provinces will be kept below 20 percent in 2014. This new rule is directed to labor-intensive industries, including Indonesia's small and medium businesses. The limitation of the regional minimum wage increase to 20 percent is much lower than the demand from Indonesia's labor associations, which requested minimum wage increases up to 50 percent.
This new government regulation will only be applied in the year 2014. After 2014, the government proposes to base the provincial minimum wage increase on Indonesia's inflation rate and add three to four percentage points to that figure.
Indonesia's Employers Association (Apindo) agrees to the boundary of 20 percent. The association wants to keep the wage increase as low as possible as it is concerned that higher wages become a large burden for employers and impact negatively on industries.
The minimum wages, which are set per province, are currently highest in Jakarta. Compared to 2012, the minimum wage in Jakarta rose 44 percent to IDR 2.2 million (USD $220) per month in 2013. On second place comes resource-rich East Kalimantan. The table below indicates the minimum wage increases from 2012 to 2013 for the five provinces that have the highest minimum wages in the country.
Minimum Wage Increase per Province
| Province | Growth 2012 to 2013 |
| DKI Jakarta | 44% |
| East Kalimantan | 49% |
| Papua | 13% |
| West Papua | 19% |
| Aceh | 11% |
Source: Ministry of Manpower and Transmigration
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