Indonesian Employers Warn Against Uniform Minimum Wage Increase

Business Community Expresses Concerns Over Investment Impact

Indonesian business associations, particularly the Indonesian Employers Association (Apindo), are raising concerns about the potential negative consequences of implementing a uniform increase in the provincial minimum wage (UMP). The business community warns that such a move could deter foreign investment and harm labor-intensive industries that are crucial to Indonesia's economy ²

Sector-Based Approach Recommended

Apindo is advocating for a more nuanced, sector-based approach to determining minimum wage increases. This method would consider various regional factors including economic conditions, inflation rates, and cost of living. The association argues that a one-size-fits-all percentage increase (such as 7% or 8%) is not practical due to the significant disparities in industrial health and regional economic conditions across Indonesia ³

Health of Industry as Key Consideration

Darwoto, Apindo's Labor Affairs Vice Chairman, emphasized that the determination of sectoral minimum wages cannot be separated from the health of the industrial sector. This view is supported by other business leaders who stress that the ability of industries to absorb wage increases varies significantly ¹

Call for Bipartite Discussions

Apindo has proposed that any adjustments to minimum wages should be the result of bipartite negotiations between workers and employers. This approach aims to ensure that wage increases are balanced against the needs and capabilities of businesses, particularly in regions with different economic realities ²