The business community in Jakarta are yet to see whether the city government will raise minimum wage by 8.03 percent for 2019 as planned, in keeping with the mandate of existing government regulation. But, citing the currently difficult economic situation, the business community had reportedly proposed a lower minimum wage increment at the range of 4.5-5 percent.
The 4.5-5 percent raise, as recently aired by a senior official of the Jakarta office of the Indonesian Chamber of Industry and Commerce (KADIN DKI Jakarta), is well below the 20-25 percent previously demanded by labor organizations. In street protests this month labor leaders claimed that workers could currently survive with a 20-25 percent raise.
Existing government regulation that was issued in 2015, or PP No. 78 Year 2015, stipulates that annual minimum wage shall increase by 8.03 percent for workers across the country. Sarman Simanjorang, vice general chairman of KADIN DKI Jakarta, said many businesses are now struggling to stay afloat amid the country’s economic slowdown and rising inflation. Accordingly, rising minimum wage would only increase their operational costs, the KADIN leader said as reported by Kontan.co.id.
Currently, the Jakarta city administration and regional administrations across the country are making preparations to implement the government regulation on 2019 minimum wage. Meanwhile, the Jakarta wage council had planned for a meeting on the matter so as to produce a recommendation to the Jakarta governor, according to Sarman Simanjorang. Early next month, on 1 November 2018, Governor Anies Baswedan and all governors across Indonesia are obliged to formally announce their region’s new minimum wage level.
Existing laws require companies unable to fulfill the minimum wage regulation to submit a formal request for a delay to the governor. Violators are subject to punishment including imprisonment.