The government has issued Government Regulation (PP) Number 51 of 2023 concerning Amendments to Government Regulation Number 36 of 2021 concerning Wages on November 10 2023. With the issuance of this regulation, the minimum wage will certainly increase.
This is because these regulations are the basis for determining the minimum wage in 2024 and beyond. The Minister of Manpower (Menaker) Ida Fauziyah requested that regional heads determine the 2024 provincial minimum wage (UMP) no later than 21 November 2023 and the district/city minimum wage (UMK) by 30 November 2023.
“We ask the Governors, Heads of Departments in charge of employment, and Regional Wage Councils to carry out their duties as mandated by this government regulation, and to determine the Provincial Minimum Wage no later than November 21 and for Regency/City Minimum Wages by November 30,” he said in written statement, Friday (10/11/2023). Ida explained that the certainty of increasing the minimum wage was obtained through the application of the Minimum Wage Formula in PP Number 51 of 2023 which includes 3 variables, namely Inflation, Economic Growth and Certain Indexes.
The Certain Index as intended is determined by the Regional Wage Council by considering the level of labor absorption and average/median wages. Apart from that, other factors that are relevant to employment conditions are taken into consideration.
“With these three variables, economic and employment conditions in a region have been accommodated in a balanced manner, so that the Minimum Wage that will be determined can be a solution to job security and business continuity,” he said.
With these provisions, said Ida, there will be a strengthening of the role of the Regional Wage Council in the form of an additional role to provide advice and considerations to Regional Heads, in the context of implementing minimum wages as well as wage structures and scales in companies in their respective regions.
“An increase in the minimum wage can encourage an increase in people’s purchasing power, which ultimately has an impact on the absorption of goods and services produced by entrepreneurs, so that companies develop and encourage the opening of new job opportunities,” said Ida.
Apart from that, according to Ida, with the wage provisions as regulated in PP Number 51 of 2023, it will create business certainty for the business and industrial world. So it is hoped that the existence of this PP will also create a fair wage system in companies, one of which is by implementing a wage structure and scale.
“The implementation of the wage structure and scale will motivate increased productivity and performance of workers/laborers because workers/laborers will be paid wages based on their work output or productivity,” he said. He added, apart from ensuring an increase in the minimum wage, encouraging people’s purchasing power, and providing legal certainty for the business and industrial world, the newly issued PP on Wages also aims to prevent disparities or wage gaps between regions.
“So in terms of preventing gaps or disparities in minimum wages between regions, PP Number 51 of 2023 is better than the wage regulations that have existed so far,” he said.