Arnoldus Kristianus, Jakarta – The government has announced a 6.5 percent increase in the minimum wage, effective next year, aimed at safeguarding the purchasing power of the middle class and bolstering Indonesia's consumption-driven economy, Chief Economic Minister Airlangga Hartarto said on Sunday.

The middle class plays a crucial role in driving public consumption, and any weakening of their purchasing power could hinder economic growth, Airlangga explained.

"This is the primary reason behind the president's decision – to enhance the purchasing power of workers in the formal sector, particularly those in industrial and service industries," Airlangga said during a gathering with the leadership board of the Indonesian Chamber of Commerce and Industry (Kadin) in Jakarta.

The Central Statistics Agency (BPS) defines Indonesia's middle class as individuals with a monthly per capita income ranging from Rp 2.04 million to Rp 9.9 million ($65.6 to $625).

Nearly 60 percent of middle-class workers are employed in the formal sector, which encompasses businesses registered with the government. These businesses are required to comply with regulations, including paying the local minimum wage, adhering to weekly working hours, providing health insurance, and distributing annual bonuses during religious holidays.

"Our objective is to protect the purchasing power of the middle class because our economic growth relies significantly on their contributions," Airlangga said.

Source: https://jakartaglobe.id/business/airlangga-explains-65-minimum-wage-increas