25 January, 2022The announcement of a minimum wage hike of 5.1 percent in the capital region of Jakarta for 2022 is a significant victory for Indonesian unions.
In December, the Indonesian Trade Union Confederation (KSPI), organized a nation-wide demonstration to reject the proposed increase of provincial minimum wages by 0.8 per cent by Indonesian Employers Association (APINDO) and 1.09 per cent by the Indonesian central government.
After continuous union protests, the Jakarta governor, Anies Baswedan, announced a 5.1 per cent minimum wage increase for Jakarta for 2022, equivalent to IDR 4.64 million (US$323).
Anies argued that the new rate is reasonable; as the average minimum wage increase for Jakarta before the pandemic was eight per cent, employers can afford it. He said that the Jakarta government must ensure justice for workers and boost their purchasing power.
“We commend the decision of the governor and urge employers’ associations to accept the hike with an open heart. The 5.1 percent increase will benefit both workers and entrepreneurs, because it will increase people’s purchasing power,”
says KPSI president and national assembly president of Federation of Indonesian Metal Workers' Union (FSPMI), Said Iqbal.
KSPI says that the central government’s power to set the provincial minimum wage has been limited, a consequence of the Constitutional Court’s ruling that the Job Creation Law is unconstitutional.
APINDO has filed a lawsuit against the decision of Jakarta’s governor. However, under the decentralized wage setting system in Indonesia, employers are legally bounded to accept the new minimum wage determined by mayors.
“We congratulate the great achievement of KSPI, including our affiliate FSPMI. The Indonesian government and employers should stop using Covid-19 as an excuse to suppress the minimum wage in the midst of economic recovery. The World Bank has forecast a 5.2 per cent GDP growth for Indonesia in 2022,”
says Shinya Iwai, IndustriALL regional secretary for South East Asia.
Currently, KSPI and FSPMI affiliates in other provinces are submitting proposals of a 5.1 per cent increase of minimum wage to respective governors.