Friday, July 26, 2024 | 00:19 WIB

The absence of a minimum wage framework

Jakarta, IO – The minimum wage (UM) increase has resulted in an annual controversy and ongoing concern, which has resurfaced this year. The issue has persisted for a long time and is expected to continue. A reluctant government fails to address the UM issue, which leads to a recurring controversial subject. 

On November 10, the President signed Government Regulation (PP) No. 51 of 2023 regarding an amendment to PP No. 36 of 2021 on Wages, which was formerly rejected by the labor community and Labor Unions/ Workers’ Unions (SP/SB). 

The labor communities rejected the PP on account of two factors: first, the crafting of PP No. 51 of 2023 did not involve the workers and labor unions (SP/SB), not even including the LKS (Cooperation Institution) Tripartit Nasional’s labor representatives; and second, the content of PP No. 51 does not provide a sense of justice for workers and their families. 

The government consistently formulates labor regulations without involving the main stakeholders in industrial relations, the Labor Unions/Workers’ Unions (SP/SB), despite the Constitutional Court’s (MK) unconstitutional verdict issuance on Law No. 11 of 2020 concerning Job Creation, urging the government to involve SP/SB’s meaningful participation, yet the government continues to disregard SP/SB. 

The government, particularly the Ministry of Manpower (Kemenaker), has always claimed to have fulfilled union aspirations in revising Government Regulation No. 36 of 2021, regardless of the regulation’s failure to reflect a two-way participatory process. The government should have negotiated with the key component: the unions, within the Tripartite Cooperation Institution (LKS), concerning PP No. 51. Despite Kemenaker’s promotion of social dialogue around the world, it remains absent in formulating labor regulations. 

The Ministry of Manpower has never explained the results of “gathering the public’s aspirations” to the public. The Regional Minimum Wage (UM) increase in Article 26 of Government Regulation (PP) No. 51 of 2023 is similar to the UM increase as stated in Minister of Manpower Regulation (Permenaker) No. 18 of 2022, which has been strongly rejected by the unions, including determining the alpha value ranging from 0.1 to 0.3. Hence, it is highly unlikely for any labor unions to propose that Permenaker No. 18 of 2022 be included in PP No. 51 of 2023. 

Timboel Siregar
Timboel Siregar, BPJS Watch Advocacy Coordinator

I believe the “public’s aspiration gathering” has been merely an administrative red tape to falsely claim the labor unions’ involvement in the making of PP No. 51 of 2023. 

In determining the UM increase stated in PP No. 51 of 2023, the government had not considered the workers’ life balance and justice, concerning the workers’ right to a decent living, as stated in the 1945 Constitution. 

A decent livelihood should be based on real wages (refecting purchasing power), not nominal wages (average daily wage). Yet, thus far, the government has only focused on regulating nominal wage increases, which is highly inconsistent with the 1945 Constitution. 

The Governors have recently set the UM increase within the Provincial Minimum Wage (UMP) for 2024 on November 21, ranging from 1.2 percent to 7.2 percent. The UMP decision had to face a raging protest, the labor unions’ resistance, and the threats of a national strike. 

The protests raised by SP/SB require careful consideration, given that the 2024 UMP increase will have to face the 2024 inflation in the public’s basic needs: rice, cooking oil, sugar, rent, and others. If the UMP increase is below the 2024 inflation rate, it is almost certain that workers’ real wages will fall, resulting in a decrease in their well-being. 

Government PP No. 51 of 2023 should have been composed more objectively by focusing on calculating the possible 2024 inflation, which might affect the 64 fundamental items of basic needs covering workers’ food, clothing, and shelter, based on a market survey. As we all know, the market prices of rice, cooking oil, shallots, garlic, and sugar are always fluctuating, indicating that the market’s inflation rate faced by people is significantly higher than the inflation rate used by the government (in determining the increase in the 2024 Regional Minimum Wage). 

In need of the government’s urgency 

The issues arising around the regional minimum wage (UM) are not only caused by regulatory issues but are also signifcantly contributed by weak supervision and law enforcement under the authority of the Manpower Supervisor. 

There are still many workers paid below the UM, and workers paid at the UM level despite their over-oneyear working period. Employers often violate the government’s obligation by adopting a Wage Structure (SSU) as a reference to workers waging their workers—a violation neglected by the government. The government needs to improve its supervisory system and law enforcement, including establishing an external monitoring system to check up on labor supervisors’ performance. 

The real wage decline is a result of the government’s failure to control the prices of people’s basic needs. The central and regional governments (together with the Central and Regional Inflation Control Team) must work diligently to control inflation, particularly prices relevant to workers’ basic needs, securing the 2024 inflation rate to stay below the 2024 UM increase. 

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The central and regional governments are also expected to establish a fiscal system to safeguard workers’ real wages, which involves the National Budget (APBN) and Regional Budgets (APBD for Provinces and Districts/Cities) to support the workers’ purchasing power, by providing subsidies or discounts for workers’ basic needs. 

The government needs to be committed to addressing the annual issue of the Regional Minimum Wage, as it has not been promising under President Jokowi’s current administration, and it is also unclear what to expect from the three presidential candidates. Based on the vision and mission statements of the three presidential candidates, there appear to be insufficient attempts to resolve the annual Regional Minimum Wage controversy. None of the presidential candidates seems to present a clear concept regarding the Regional Minimum Wage.