New Formula of Minimum Wage

𝐏𝐏 𝐍𝐨. 𝟑𝟔/𝟐𝟎𝟐𝟏 𝐯𝐬. 𝐏𝐏. 𝟕𝟖/𝟐𝟎𝟏𝟓

 

A news on lawsuit against Jakarta city  Governor Anies Baswedan, this time about the increase of UMP (Upah Minimum Provinsi or province minimum wage) for the city trigerred us to browse the new government regulation No. 36 of 2021 (PP No.36/2021 the replacement to the  previous  PP No.78/2015) on Remuneration.

 

• The new regulation which is issued by the Ministry of Labor, as governed by a formula in the Article 26, had resulted an increase of UMP in the Jakarta city by 0.85% effective January this year. Meanwhile, the average increase over all provinces in Indonesia for this year is at 1.09%.

 

• A check on the city’s inflation rate and GDP growth during 4 (four) quarters preceeding deadline November 21, 2021 revealed figures of 1.14% YoY and 3.55% YoY, respectively. Average consumption percapita in Jakarta region is at IDR2.3mn/month. Average number of members of household is 4 (four)people.  The average number of income-generating member in a household is 1 (one) person.  All data are from the Indonesia Central Statistic, except the last one from the media.

 

• The last point has been source of conflict, we note, especially when increase in the UMP does not macth with the general increase of prices. This prompted labors protest in the city end of last year.

 

• In December the city Governor issued a new decree for an UMP revision of an increase by 5.1% hike to IDR4,641,854 / month factoring-in estimates both for the country’s inflation and GDP growth rate for this year

 

• At the other end, based on the previous previous regulation of PP No.78/2015, as stated in the Article No. 44, we came up with an increase rate of UMP for Jakarta region by 4.69% for this year

 

 

𝐍𝐞𝐰 𝐟𝐨𝐫𝐦𝐮𝐥𝐚 𝐚𝐬 𝐢𝐧 𝐀𝐫𝐭𝐢𝐜𝐥𝐞 𝟐𝟔 𝐨𝐟 𝐏𝐏 𝐍𝐨.𝟑𝟔/𝟐𝟎𝟐𝟏

 

Please see details on page 2 (two) of the enclosed document

 

  

𝐎𝐥𝐝 𝐟𝐨𝐫𝐦𝐮𝐥𝐚 𝐚𝐬 𝐢𝐧 𝐀𝐫𝐭𝐢𝐜𝐥𝐞 𝐍𝐨. 𝟒𝟒 𝐨𝐟 𝐏𝐏 𝐍𝐨.𝟕𝟖 /𝟐𝟎𝟏𝟓

 

Please see detail on page 3 (three) of the enclosed document

 

𝐂𝐨𝐧𝐜𝐥𝐮𝐝𝐢𝐧𝐠 𝐫𝐞𝐦𝐚𝐫𝐤

 

𝐀𝐛𝐨𝐮𝐭 𝐭𝐡𝐞 𝐧𝐞𝐰 𝐟𝐨𝐫𝐦𝐮𝐥𝐚

·         The new more variables-inclusive formula is questionable to fulfil the objective to create a more equal income among regions in Indonesia, as quoted from the media of the statement of the Ministry of Labor.

 

·         Also in the case when the main driver of the formula is the “Upper limit”, which has an average number of members of a household as the numerator and number of income-generating members in a household as the denominator.

 

·         Should the “Upper limit” produces lower UM_(t+1)  , as stated by the regulation, the Governors should keep the  UM_(t) unchanged for the next year. This may create needless psychological effect from the labors perspective

 

·         To need of more input of statistical data is to put higher risks to the computation of the formula

 

𝐀𝐛𝐨𝐮𝐭 𝐭𝐡𝐞 𝐧𝐞𝐰 𝐫𝐞𝐠𝐮𝐥𝐚𝐭𝐢𝐨𝐧

 ·         The new regulation omits Articles that govern payment for “ Sektor Unggulan “ or High-performing sectors available in the previous PP No.78/2015

 

·         The new regulation introduces wages for part-time workers in-terms of hourly, weekly , monthly, and in terms-of works output,  in accordance with Employers’ payment structure and scale

 

·         The new regulation maintains the role of Remuneration Board both in the province and country’s level

 

·         Both regulations provide flexibilities for  “reality-check”, also from the role of Remuneration Board.

 

·         We put in the attachment simulation of computation of the new formula from  media CNN Indonesia at the end of the page

 

 

The end of the Report

 

 

Contact writer:  Muhammad

 62 21 081290306158