1 month ago
32
December 3, 2024 | 07:01 pm
TEMPO.CO, Jakarta - The government is increasing the 2025 provincial minimum wage. This ignores national economic conditions.
The decision by President Prabowo Subianto to increase the average 2025 provincial minimum wage (UMP) by 6.5 percent is a populist policy. Instead of considering the state of the economy as the main factor, this new wage policy was simply issued to please the groups of workers and businesspeople who supported him during the last presidential election.
Prabowo took the middle road between pressure from workers to increase the UMP by 8 to 10 percent and requests from employers for an increase of no more than 3 percent. The figure chosen was 2.8 percent higher than the average rise in the 2024 minimum wage of 3.65 percent.
The pressure to increase the minimum wage is a direct result of the Constitutional Court’s ruling that removed 21 articles from the Job Creation Law. Moreover, Government Regulation No. 51/2023 is no longer used as the basis for calculating the UMP. The components of the calculation are now inflation, economic growth and a particular index. This index is symbolized by alpha, referring to a variable representing the contribution by workers to the economic growth of provinces or regions and cities.
Previously, 5 million workers threatened to take to the streets if the government did not meet their demand for an increase in the UMP of 10 percent. They claimed that this was the ideal level because it would improve people’s buying power and prevent it from being eaten away by inflation. On top of this, next year will see a number of policies that will increase workers spending, from a value-added tax of 12 percent and an increase in Health Care and Social Security Agency contributions to a rise in Public Housing Savings (Tapera) installments, obligatory vehicle insurance, and restrictions on energy subsidies.
Meanwhile, employers are worried about an increase in the UMP of more than 3 percent at a time when the manufacturing sector is still recovering, and the purchasing power of middle-class people is under pressure. Even before the UMP rise, many businesses have been struggling, and have reduced production capacity or laid off large numbers of workers. In the last 10 months of this year, redundancies have soared by 64 percent, and 43 percent of these have been in the manufacturing industry sector.
The labor-intensive manufacturing sector is also struggling in the face of a flood of imports, the weakness of the rupiah, increasing prices of raw materials, export tariff barriers, and the threat of a trade war following the reelection of Donald Trump as President of the United States.
Businesspeople are also unhappy about the increase in the UMP in line with the new formula following the Constitutional Court’s ruling because it adds to uncertainty for investors. Hence, the annual ritual of setting the UMP is always marked by ‘drama’ triggered by conflict between workers and employers.
President Prabowo has a real opportunity to put an end to this annual squabbling over the determination of the minimum wage. Ideally, he would have the courage to make a firm decision—increasing or decreasing the minimum wage—based on proper calculations of economic projections for next year.
At a time when people’s buying power is in decline and the signs of deindustrialization are staring us in the face, along with the major challenges from a global economic slowdown, Prabowo—with the assistance of his economic team—could draw up strategic measures to save the national economy. Let us hope that the government does not lead the people into a crisis that could have been prevented from the start just for the sake of populist policies.
Prabowo Raises Minimum Wage, Workers Hope Employers Accept President's Decision
3 hari lalu
KSBSI appreciates President Prabowo's decision to increase the minimum wage by 6.5 percent next year. Employers question the basis of the decision.
Prabowo to Raise Minimum Wage by 6.5% in 2025, Here's the List of Indonesian Wages in Past 5 Years
3 hari lalu
Prabowo says the minimum wage is an important social safety net for workers.
Prabowo Announces 6.5% Increase for 2025 Minimum Wage
4 hari lalu
Prabowo said the minimum wage is a vital social safety net for workers.
A New Plan for the Food Sector
4 hari lalu
The Agriculture Ministry is to take over the control of food institutions and state-owned enterprises.
The Risk of Prabowo's Pragmatic Diplomacy
5 hari lalu
The agreement between Prabowo and Xi Jinping to jointly manage the region of overlapping claims disadvantages Indonesia.
Apindo Protests Ever-changing Minimum Wage Formula: 'Business Players Need Certainty'
5 hari lalu
Indonesian Entrepreneurs Association (Apindo) argues that the continually changing provincial minimum wage formula has negative impact on businesses.
A Good Example from Hasanuddin University
6 hari lalu
Cases of sexual violence on campus often go unresolved. Campus task forces established to handle these cases should include legal experts.
The Danger of Jokowi's Intervention in Regional Elections
6 hari lalu
Jokowi is backing a number of candidates in the regional elections, including in Jakarta and Central Java.
2025 Minimum Wage: Prabowo's Govt Cornered Between Workers' Demands and Employers' Suggestions
7 hari lalu
Observers suggest that 2025 minimum wage should consider the variables of decent living needs (KHL), inflation, and economic growth.
Prabowo Gathers Several Ministers at Palace to Discuss 2025 Minimum Wage
8 hari lalu
President Prabowo gathered several ministers at the Presidential Palace in Jakarta for an internal meeting.
