The time has come for the annual wage adjustment, which is the once-a-year HR-related event and is the biggest focus. As Indonesia's minimum wage is usually revised on January 1st, many companies seem to make annual wage adjustments effective from January, but the actual decision is often delayed as they look at the surrounding situation or wait for an agreement with the labor union, and there are many companies that retroactively make payments to January 1st after the decision is made. This year, due to the effects of the coronavirus pandemic and the Employment Creation Omnibus Act, we need to take a slightly different approach than in the past. Let's take a closer look at what parts are different.

[Salary increase request with few basic topics]

In the past, I believe that in many companies, the labor union would first demand a raise that was more than double the minimum wage increase rate, and the focus of negotiations would be how much could be added to the minimum wage increase rate. On the other hand, even at the highest rate of increase, the minimum wage in 2021 will be 6.51%, which is significantly lower than before. Furthermore, as there has been no movement to set sector-specific minimum wages in connection with the Job Creation Omnibus Law, some companies are seeing lower minimum wages depending on their business sector in monetary terms. However, the labor union is considering how to win a big raise as wages for overtime work and other wages have decreased. Since the formula used up until last year, ``inflation rate + GDP growth rate,'' cannot be used, many labor unions seem to be aiming for an 8% increase rate, the same as last year.

[Performance evaluation with an eye to the future]

On the other hand, companies are thinking about how to limit salary increases. If the number of orders is clearly decreasing and the operating rate is declining, the labor union can understand that the company will become seriously angry if it makes too big demands. However, depending on the company, profits may not actually be decreasing that much. On the other hand, it is not yet clear how much the company will be affected by the coronavirus pandemic in 2021, so management is not optimistic and is thinking about limiting salary increases. What emerges here is a conflict between ``Japanese management who are preparing for uncertainty'' and ``Indonesian employees who want everything they can get now because there is no point in thinking about something they don't understand.'' “Just like this 1 If the current situation continues for a year and the economy is under pressure, we will not be able to pay wages. ``I need to save money so I don't have to choose to close down the company at that time,'' which creates anxiety, will only make employees feel more uncomfortable. It is more effective to appeal with numerical values, such as the profit margin on sales and the minimum sales required to pay wages. By presenting numerical values ​​and analyzing them yourself, you will be able to find a compromise.

Related legislation: Employment Creation Omnibus Law UU-11/2020