The legal deadline for setting the minimum wage for next year has already expired, but the government has announced that it has received approval for the legislation stipulating the minimum wage calculation formula. It also stipulates that the minimum wage will be set by December 24th. So, what kind of response and preparation should be done in response to the minimum wage that will take effect on January 1st?

[Calculation formula and data used]

It has been announced that the calculation formula has been determined as ``inflation rate + (GDP increase rate x 0.5 to 0.9)''. What are the inflation rate and GDP growth rate used here? Minimum wages are set at two levels: state level and prefecture/city level. According to current regulations, the inflation rate or GDP growth rate of the region is referred to, but the GDP growth rate is not set at the prefecture/city level. The inflation rate is announced every month by the Bureau of Statistics, so there is data that can be used, but the GDP growth rate only goes up to the state level, so it is logically impossible to add up data at different levels. Therefore, it is stipulated that the state's inflation rate and GDP growth rate should be used even at the prefecture/city level. The issue here is whether a reasonable number really comes out.
The government has said that it will not increase at the same rate nationwide like last year, so the specific number that ranges from 0.5 to 0.9 will vary depending on the region. Therefore, the key point is how convincing the explanation is, ``Why is this region multiplied by this number?'' This poses a major challenge for local governments.

[Labor union federation's demands and future movements]

Since workers want the minimum wage to be set as high as possible, they naturally expect it to be 0.9. Under such circumstances, Syed Iqbal, head of the Indonesian Federation of Trade Unions, has threatened to hold large-scale demonstrations if the 0.9 is not achieved. However, this comment is the same as saying that the union has accepted that multiplication by a specific number is between 0.5 and 0.9. Looking at the data, it is not yet clear which months' data will be used, but the inflation rate is probably 2.5 to 3%. On the other hand, the GDP growth rate is about 5%, so it is set at 5% to 7.5%. Originally, the union federation's final demand was 6.5%, so the claim that ``it has to be 0.9'' exceeds their original claim and is inconsistent, but I have never seen anyone say to the labor union federation, ``Didn't we say 6.5% is fine?''
However, while waiting for this, companies must prepare for their own annual wage adjustments. First, we need to simulate what would happen if there was a 5% to 7.5% salary increase. If you are splitting the cost between bear and appraisal, you need to be sure of what proportion it should be and where it is at the very end of your budget. You will also need to prepare basic company data and data that will be used when negotiating with the labor union. Then, create a scenario that will lead to the settings and wait patiently for your turn. There is a high possibility that sectoral wages will increase at the same rate, so the only thing you can do is negotiate with that in mind.