Indonesia Increases the Minimum Wage for 2023

Posted by Written by Ayman Falak Medina Reading Time: 2 minutes

Indonesia’s Ministry of Manpower announced that minimum wages across the country will increase by a maximum of 10 percent for 2023, under Minister of Manpower Regulation 18 of 2022 (MOM 18/2022). This was smaller than what labor unions had demanded with many demanding as much as a 25 percent increase, citing fuel, food, and housing inflation.

Indonesia’s Minimum Wages for 2023

Province

Monthly minimum wage rate (rupiah)

Aceh

3,413,666 (US$220)

North Sumatra

2,710,493 (US$175)

West Sumatra

2,742,476 (US$177)

Riau

3,191,662 (US$206)

Riau Islands

3,279,194 (US$211)

Jambi

2,943,033 (US$190)

South Sumatra

3,404,177 (US$220)

Bangka Belitung

3,498,479 (US$226)

Bengkulu

2,418,280 (US$156)

Lampung

2,633,284 (US$170)

Banten

2,661,280 (US$171)

DKI Jakarta

4,901,798 (US$316)

West Java

1,986,670 (US$128)

Central Java

1,958,169 (US$126)

Special Region of Yogyakarta

1,981,782 (US$128)

East Java

2,040,244 (US$131)

Bali

2,713,672 (US$175)

West Nusa Tenggara

2,371,407 (US$153)

East Nusa Tenggara

2,123,994 (US$137)

West Kalimantan

2,608,601 (US$168)

South Kalimantan

3,149,977 (US$203)

Central Kalimantan

2,599,456 (US$167)

East Kalimantan

3,201,396 (US$206)

North Kalimantan

3,251,702 (US$210)

Maluku

2,812,827 (US$181)

North Maluku

2,976,720 (US$192)

Gorontalo

2,989,350 (US$193)

North Sulawesi

3,485,000 (US$225)

Southeast Sulawesi

2,758,595 (US$178)

Central Sulawesi

2,599,456 (US$168)

South Sulawesi

3,385,145 (US$218)

West Sulawesi

2,608,601 (US$168)

Papua

3,864,696 (US$249)

West Papua

3,282,000 (US$212)

How was the minimum wage increase calculated?

MOM 18/2022 stipulated a new formula for calculating the minimum wage increase. The calculation for the minimum wage took into account Indonesia’s economic growth, inflation, and the contribution of employees to economic growth.

The formula is as follows:

UM (t+1) = UM (t) + (Adjustment of UM value x UM (t))

Where,

  • UM (t+1) = the minimum wage to be determined; and
  • UM (t) = the current minimum wage.

Further,

The following equation is used to find the figure of the adjustment of the UM value from the above formula.

Adjustment of UM value = Inflation + (EG x α)

  • Inflation = refers to provincial inflation from September last year to September this year.
  • EG = economic growth; and
  • α = an index that describes the contribution of labor to economic growth, valued at a range of between 0.10 and 0.30.

Hourly wages for part-time workers

Indonesia has sought to reform its labor laws through the Omnibus Law and has since abolished the sectorial minimum wage through Government Regulation 36 of 2021 — an implementing regulation of the Omnibus Law — and introduced an hourly wage for part-time workers.

The formula for determining the hourly wage is as follows:

Hourly wage = Monthly wage/126

To calculate the daily wage:

Six working days/week

Daily wage = Monthly wage/25

Five working days/week

Daily wage = Monthly wage/21

The employer and employee are allowed to set their agreement, but the final salary should not be lower than the calculation using the aforementioned formulas.


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