The Jakarta state minimum wage setting has entered into a chaotic situation. Although we cannot predict what will happen in the future, I would like to review the minimum wage by looking at the minimum wage setting in Jakarta province.

[Calculation based on statistics bureau data]

2020The minimum wage setting regulations have changed significantly due to Law No. 11 of 2021 (commonly known as the Employment Creation Omnibus Law) and Cabinet Order No. 36 of 2021. With the effective date and deadline set, the minimum wage can now be changed only once a year, whereas previously it could be revised any number of times. It also established the conditions under which provincial/municipal minimum wages could be set, and sectoral minimum wages were abolished at both provincial and provincial/city levels. The calculation formula for the revision was determined in detail, and the data was calculated using data provided by the Statistics Bureau, so the function of the Wage Committee, which was made up of government, labor, and management, and which had been attracting attention until now, became meaningless. Indonesia's national minimum wage is well-defined and can be calculated by the Statistics Bureau if laws and regulations are complied with, but in reality the results differ from those set by the law.

[Where to go to set regulations]

Let's take a look at how the legal setting is not being followed using the Jakarta state minimum wage setting as an example. First, on November 15, 2021, the Wage Committee, which is made up of government, labor, and management, recommended a 3.57% increase to 4,573,845 rupiah per month to the governor. This value is not based on a legal formula. However, the governor's decision, which was first announced on November 21, 2021, was not based on the recommendation from the Wage Commission, but was a 0.85% increase from the previous year to Rp 4,453,935 per month, in line with the legal calculation. The state minimum wage is required to be set by November 21 at the latest to take effect on January 1 of the following year, so this first set was in line with the law, and the governor prioritized the law rather than a recommendation from the Wage Commission, which does not follow the law. However, workers began to protest against this unexpectedly small minimum wage amount. The governor's decision dated December 16, 2021 increased the monthly fee by 5.11% to 4,641,854 Rupiah. The deadline had expired and the calculation method was not in accordance with the law, so the management made a big protest and filed a petition for unconstitutionality to question the legality of this decision. And this time, it was ruled unconstitutional. Curiously, the Constitutional Court did not simply invalidate the Governor's Decision, but ordered the Governor's Decision to be issued on November 15, 2021 at a monthly rate of Rp 4,573,845, an increase of 3.57% in accordance with the amount recommended by the Wage Commission. This is a major violation of the law, since the minimum wage for a region has been ordered by an agency that determines whether published laws and regulations are legal or unconstitutional. In such a situation, the Governor of Jakarta decides to appeal. This unconstitutional ruling will be challenged in the Supreme Court in the future, but it is already August. On November 20th, the minimum wage amount that will take effect on January 1st, 2023 will be determined. The only thing we can do is wait and see what happens, whether they are aiming for it to become meaningless when time runs out.

Related regulations: Law No. 11 of 2020 UU-11/2020, Government Decree No. 36 of 2021 PP-36/2021