Aep Supandi, Bandung – The West Java branch of the Indonesian Employers Association (Apindo) on Tuesday criticized local leaders who have proposed substantial rises in the minimum wage, aligning closely with the demands put forth by labor unions.
Various unions across regencies and cities in the province have advocated for a minimum wage hike of at least 16 percent.
West Java Apindo Chairwoman Ning Wahyu Astutik said such demands contradict the latest government regulation on wage formulation systems.
The West Java provincial government has recently announced a modest 3.57 percent increase, elevating the monthly minimum wage to Rp 2.06 million ($130). However, in certain regencies and cities with many industrial centers, the minimum wages are more than double the provincial threshold.
"We regret the unauthorized actions taken by mayors or regents in contravention of existing regulations, as these actions may adversely affect the investment climate," Ning said during a seminar in Bandung.
Although Ning did not specify any names, the acting mayor of Bekasi, Gani Muhammad, has recommended a 14 percent hike in the city's minimum wage, falling slightly below the unions' demands.
Similarly, the local government of the neighboring regency of Karawang proposed a substantial 12 percent increase.
Ning added that the central government has provided clear wage formulation guidelines based on regional economic growth and inflation rates, which should be adhered to at the local level.
These guidelines aid investors in crucial decision-making regarding new investments or business expansions, she said.
Ning expressed concerns about potential repercussions, stating that increased wages might compel business owners to raise prices and decrease profit margins. Moreover, escalating business costs could undermine Indonesia's competitiveness, potentially prompting global investors to relocate operations and orders to neighboring countries.