Indonesian Workers Gain Leverage with 6.5% Minimum Wage Hike
Jakarta, Indonesia – A significant wage increase is coming for Indonesian workers in 2025. President Prabowo Subianto recently announced a 6.5% hike in the minimum wage, a move aimed at boosting worker incomes and ensuring a decent standard of living. The increase, set to take effect on January 1, 2025, follows a careful calculation considering various economic factors.
"If there are companies that do not apply the 2025 minimum wage, legal mechanisms will certainly apply," stated Indonesian Manpower Minister Yassierli. "We also have labor inspectors, so later workers can report to labor inspectors."
The new minimum wage, outlined in Ministerial Regulation No. 16 of 2024, is the result of a collaborative effort involving Finance Minister Sri Mulyani Indrawati, Coordinating Minister for Economic Affairs Airlangga Hartarto, and People’s Empowerment Minister Muhaimin Iskandar. The calculation takes into account economic growth, inflation rates, and indices reflective of the labor force’s contribution to provincial economic development.
The formula for determining the provincial minimum wage for 2025 is straightforward: 2025UMP = 2024UMP + increase value of 2025UMP. The increase value itself is calculated as 6.5 percent of the 2024 UMP.
This meticulous process ensures a balance between the interests of companies and workers, while upholding the principle of proportionality to ensure workers earn enough for a dignified life. While the national minimum wage serves as a baseline, eachprovince has the authority to set its own minimum wage for districts and cities (UMK), exceeding the national minimum.
In a move that empowers workers, Minister Yassierli emphasized reporting mechanisms. He stated,
"If there are companies that do not apply the 2025 minimum wage, legal mechanisms will certainly apply. We also have labor inspectors, so later workers can report to labor inspectors."
This assures Indonesian workers that their rights will be protected and that they can seek recourse if their employers fail to comply with the new minimum wage regulations.
This wage increase carries significant implications for Indonesia’s economy, potentially impacting consumer spending, business costs, and overall economic growth. It also highlights the government’s commitment to improving the livelihoods of its workforce and ensuring a fairer distribution of economic benefits.
For a glimpse into the history of Indonesian wages over the last five years and comprehensive coverage on this development, please see: "Prabowo to Raise Minimum Wage by 6.5% in 2025, Here’s the List of Indonesian Wages in Past 5 Years"
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