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TEMPO.CO, Jakarta - The decision of the Constitutional Court (MK) to approve the judicial review of the Job Creation Law resulted in the Government Regulation Number 51 of 2023 regarding provincial minimum wage or UMP becoming invalid.
In the regulation signed by President Jokowi, the increase in UMP per year is based on three variables, namely inflation, economic growth, and a specific index symbolized by alpha. Based on this calculation, UMP for Jakarta increased by 3.8 percent last year.
For the year 2025, workers in a rally in front of the Jakarta Provincial Government office on October 30, 2024, demanded an 8-10 percent increase in UMP.
Minister of Manpower, Yassierli, stated that the formula for the increase in the Provincial Minimum Wage (UMP) for 2025 is being discussed. According to him, the Government is focused on helping workers with low incomes to receive a decent wage.
Generally, he does not want to disclose the amount of the Minimum Wage increase, but he ensures that all parties involved in labor wages have been invited to discuss and collaborate to find the right formula.
Starting from the National Wage Council and the Tripartite Cooperation Institution (LKS), all these institutions have been invited by the Ministry of Manpower to consolidate and find the right solution regarding UMP, he said at the Presidential Palace, Wednesday, November 6, 2024.
In a cabinet meeting, according to Yassierli, issues related to the Minimum Wage were discussed, and he will soon reveal the details to the media at his Ministry.
"We must be firm that this ministerial regulation can truly help workers with low incomes while considering the business world," he said.
Prior to this, on Monday, November 4, 2024, President Prabowo gave several directives to the Ministry of Manpower regarding strategic steps of the government in responding to the Constitutional Court (MK) decision on judicial review of the Job Creation Law.
DPR Supports UMP Not Based on Old Government Regulations
Deputy Speaker of the Indonesian Parliament Sufmi Dasco Ahmad stated that Government Regulation (PP) Number 51 of 2023 regarding wages no longer applies following the Constitutional Court Decision Number 168/PUU-XXII/2024 on the constitutional review of the Job Creation Law concerning labor.
He explained that the agreement was made after the leadership of the Indonesian Parliament met with the Minister of Manpower and the Minister of Law representing the government, as well as the Labor Party representing labor elements. Thus, the wage setting system for 2025 will be further discussed.
"And because PP 51 is no longer valid, the wage system and others will be discussed together," Dasco said at the Parliament Complex, Jakarta, on Wednesday.
However, he mentioned that the discussion would be carefully assessed based on the labor wage index to ensure that no party is disadvantaged, both employers and workers.
Moreover, he stated that the Indonesian Parliament would also implement the Constitutional Court's order to create a new Employment Law separated from the Job Creation Law. He was optimistic that the drafting of the law would not take a long time.
"But it takes time to discuss because this is not an easy matter and should not be rushed," he said.
Minister of Law Supratman Andi Agtas mentioned that the draft of the Employment Law does not need to be included in the National Legislative Program (Prolegnas). It is a consequence of the Constitutional Court Decision that can be incorporated into the open cumulative bill.
However, he emphasized that the most important thing to be immediately addressed is wage matters. According to him, all parties agree that the Minister of Manpower's Regulation will soon be issued to regulate wage matters for 2025.
"Therefore, we will coordinate with the Minister of Manpower as soon as possible," said Supratman.
Chairman of the Labor Party, Said Iqbal, also agreed with the annulment of PP Number 51 of 2023.
He stated that the Constitutional Court Decision must be promptly responded to regarding the issue of minimum wage. He explained that the determination of the minimum wage should have been applied on January 1, 2024. In his opinion, the determination of city/district minimum wages is usually issued 40 days before January 1, 2025, namely on November 21, 2024.
However, as for the legal basis for the minimum wage through the Minister of Manpower's Regulation or other regulations, he stated that it does not have to be issued on November 21, 2024 as long as it is agreed upon by all parties.
"We, the Labor Union, agree with the suggestion by Mr. Sufmi Dasco to discuss more carefully, in more detail, and in more balance between the interests of employers and workers as per his earlier guidance. We agree," Said said.
Coordinating Minister of Politics and Security Affairs: UMP is Irrational and Hampers Economic Growth
Coordinating Minister of Politics and Security Affairs Budi Gunawan believes that excessively high or irrational Provincial Minimum Wages can hinder Indonesia's economic growth. The UMP policy can also affect the recruitment of new workers and cause workers to switch to the informal sector.
Budi expressed this in a panel discussion at the central coordination meeting and the forum for regional leadership coordination (Forkopimda) in Sentul, Bogor, West Java, on Thursday, November 7, 2024. The former Head of the National Intelligence Agency warned regional heads that the UMP determination could lead to non-compliance with regulations by every company.
This decision needs to be carefully considered to avoid falling into populist policies," said Budi on Thursday, November 7, 2024.
In a separate occasion, Deputy Minister of Manpower Immanuel Ebenezer Gerungan stated that the government respects the Constitutional Court's decision on judicial review of the Job Creation Law.
The government will take strategic steps to coordinate with relevant ministries/agencies and invite labor unions to dialogue on the follow-up after the Constitutional Court's decision.
"The most crucial thing to be addressed immediately is the determination of the Minimum Wage (UM) for 2025, as this is awaited by all parties," he said in front of protesters at his office on Wednesday.
ANTARA and Daniel A Fajrie contributed to the writing of this article.
Editorial Choices: Indonesia's New Manpower Minister Ensures Minimum Wage to Increase in 2025
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