Jakarta – The West Java branch of the Indonesian Employers' Association (Apindo) reacted disapprovingly to a newly-issued ministerial decree that allows regional governments to increase the minimum wage by up to 10 percent, saying it could widen the gap between industrial and non-industrial districts in the province.

Several districts and municipalities in West Java such as Karawang, Bekasi, and Bogor have among the highest minimum wage in the country thanks to the arrival of factories and assembly plants run by major multinational companies.

The minimum wage in those districts can historically exceed Rp 5 million if a 10 percent rise is imposed.

"There is something very strange about the formulation because it enables certain districts that already have the minimum wage above the ceiling to enjoy a much higher rise compared to other districts," West Java Apindo Chairwoman Ning Wahyu Astutik said on Saturday.

According to the decree signed by Manpower Minister Ida Fauziyah on Thursday, an "adjustment" to the current minimum wage is determined by inflation, growth, and productivity figures of the respective district or municipality.

The rise in the minimum wage a governor can impose in his province is limited to 10 percent.

But Ning Wahyu said the new policy will make the minimum wage in certain districts much higher than that of Ciamis, Banjar, Kuningan, Pangandaran, and other districts which aren't lucky enough to have major industrial operations.

She also said the ministerial decree may run counter to the 2021 Government Regulation on the Wage System which stands higher in the hierarchy of regulations.

"This is dangerous. What's wrong with the administrative system of this country?" she said. "Apindo insists that the 2021 Government Regulation number 36 on the Wage System be reinstated," she said.

The decree obliges all governors to decide on next year's provincial minimum wage by November 28 at the latest. The deadline for the formulation of minimum wage at the district and municipality levels – also signed by a governor – is on December 7.

Source: https://jakartaglobe.id/business/west-java-apindo-objects-to-new-minimum-wage-rule