3 hours ago
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November 28, 2024 | 01:52 pm
TEMPO.CO, Jakarta - The Association of Indonesian Entrepreneurs (Apindo) protested the formula for provincial minimum wage (UMP), which they claimed was often changed by the government. Apindo's Chairperson Shinta Kamdani stated that this made investors hesitant about doing business in Indonesia.
According to the association's records, the government has changed the UMP formula at least four times in the last ten years.
"What's important for business players is that we need certainty. It can't keep changing all the time. Investors are asking. I think the government needs to pay attention that we can't keep changing rules continuously," said Shinta after a press conference on Wednesday, November 27, 2024, titled "Visit Store Klingking Fun - Anti Golput Discount Party Edition for the 2024 Regional Elections."
Previously, Apindo's Head of Manpower Division, Bob Azam, mentioned that the decision to constantly change the UMP formula is not good for the investment climate. "Increasing uncertainty, and this is not good for investments. Very bad," said Bob when contacted by Tempo on Saturday, November 9, 2024.
Bob explained that the business world needs to estimate whether the investment is profitable or not, and how long the capital will be returned. To calculate this, he said assumptions are needed, including wage increases. "If the regulations keep changing, all calculations will change," he added.
In addition to investment issues, he also added that the business world allocates budgets for salary increases. There are also medium and long-term contracts that require price estimations. He believes both of these will be disrupted by regulatory changes.
Apindo also stated that frequent regulatory changes could lead to job losses and an increase in the informal sector. According to data from the Central Statistics Agency (BPS) as of August 2024, 57.95 percent of Indonesian workers are in the informal sector.
Apindo's protest was triggered by the latest decision of the Constitutional Court, No. 168/PUU-XXI/2023. On Thursday, October 31, 2024, the Constitutional Court granted the petition partially filed by the Labor Party and other labor unions regarding the material review of Law No. 6 of 2023 concerning the Enactment of Government Regulations in Lieu of Law No. 2 of 2022 concerning Job Creation.
The session led by Chief Justice of the Constitutional Court, Suhartoyo, approved the constitutional review of 21 norms in the Law. One of the points in the Constitutional Court's decision was regarding the minimum wage.
The President of the Labor Party and also the Confederation of Indonesian Labor Unions (KSPI), Said Iqbal, urged the government to immediately decide on the increase in provincial and district/city minimum wages (UMP and UMK) and sectoral minimum wages (UMSP and UMSK) in accordance with Constitutional Court Decision No. 168/PUU-XXI/2023.
Through this decision, the Constitutional Court revoked some legal norms of the Omnibus Law on Job Creation, especially the new minimum wage norms.
Labor groups demand that the minimum wage increase be determined based on the inflation value plus a certain index, multiplied by the economic growth value. They also reject the plan to differentiate minimum wages for labor-intensive and capital-intensive industries currently being discussed by the Ministry of Manpower.
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