11As we enter the month, we start to worry about next year's minimum wage. This is because next year's budget has to be drawn up, which has a big impact on labor costs. Before the Omnibus Act, the inflation rate was equal to the GDP rate, so it was easy to predict that large raises would be a headache. Under the Omnibus Law, which will be explained below, a The newly established calculation formula requires checking data from the National Statistics Bureau, and since it is a figure that is not generally reported in the media, it will be easier to receive inquiries such as ``How much will it be?'' What do you think the current predictions will be?

[Decision flow based on the minimum wage calculation formula]

First, the upper and lower limits of the minimum wage are calculated based on data such as average monthly consumption per person, average number of family members, and average number of employees per family calculated in the National Economic and Social Survey conducted in March of each year. This should already be possible to calculate by region. There is a calculation formula that combines the upper and lower limits with the inflation rate, GDP rate, current minimum wage, etc., and uses this to determine the provisional minimum wage. The national inflation rate announced on November 1st was 5.71% compared to the previous year. Meanwhile, the GDP growth rate for the third quarter was announced at 5.72%. Future changes need to be taken into account, but since the numbers are not much different, the higher one will be used, so a number in the upper 5% range will probably be used. The minimum wage amount is calculated based on the provisional minimum wage amount based on the purchasing power parity rate, labor absorption rate, and median wage, and the average value is determined as the minimum wage amount.

[Setting of salary reduction amount]

The Minister of Labor has already recommended that the minimum wage be calculated and determined based on the formula stipulated in the Omnibus Act, and appears to be trying to suppress the opposition from labor unions, saying, ``The rate of increase will be greater than in 2022.'' On the other hand, the labor unions are raising the figure of 13% while threatening to hold large-scale demonstrations, but some interviewees have already come up with figures as high as 8% or 6%, and it seems that they are starting to think that 13% is actually unrealistic.

On the other hand, from the company's perspective, the inflation rate and soaring fuel costs are having a major impact on company costs, and I'm sure you're wondering to what extent next year's cost increases, including the soaring transportation costs, can be suppressed. The 2022 minimum wage in Jakarta province has reached the 2023 minimum wage determination period with the appeal pending, and the person who filed the appeal has already retired, so it seems likely that the Jakarta province minimum wage will remain in obscurity until the next year. There are many companies where the minimum wage that should be applied is considerably lower due to the influence of the previous sector-specific wages, and there are also many companies whose company minimum wage is already considerably higher than the minimum wage in prefectures/cities where there will be no change in the minimum wage in 2022. It will be interesting to see what happens at the end of this month.

Relevant regulations: Law No. 13 of 2003 UU-13/2003, Government Decree No. 36 of 2021 PP-36/2021