Jakarta, Oct 26 (Antara) - Beginning next year, workers will start receiving annual wage which is raised based the increase in the inflation and economic growth rates.
The policy to introduce the annual increase in the labor wage system was included in the government's fourth economic policy package issued last month.
In order to carry out the policy, the government issued a Government Regulation (PP) on Provincial Minimum Wage (UMP) on Friday, October 23. The UMP will become the basis for the annual wage increase for workers.
"We are grateful that the Government Regulation on Regional Minimum Wage has been signed by President Joko Widodo. It has been enacted into law. Thus, it is now in force. Governors will be required to use the law when deciding the provincial minimum wage (UMP) for next year (2016). They should use the formula as provided in the Government Regulation," Manpower Minister H Hanif Dhakiri said after opening a coordination meeting on supervision and control at the Manpower Ministry's Office in Jakarta on Monday.
The minister said the issuance of the Government Regulation on the Provincial Minimum Wage is a breakthrough in the employment sector in Indonesia. This was because the decision to formulate the UMP was earlier dominated by various kinds of politics, leading to irrational wage hikes and uncertainty.
"In essence, the wage is a right of the workers and the employers. The state has a minimum wage policy to protect workers from being trapped to work at low wages, protect those who are not yet employed so that they could enter the workforce market and protect employers so that their business develops and job opportunities increase," the minister noted.
Minister Hanif asked all the governors across the country to adjust and work out the UMP for their respective provinces, based on the formula given in the new government regulation. As is already known, the formulation of labor wage in the new PP is based on the percentage of the national inflation and economic growth rates. They are the main variables in calculating the increase in the minimum provincial wages.
In the future, governors across the country are required to simultaneously announce the increase in the wage on November 1 every year.
The newly issued Government Regulation on the Provincial Minimum Wage is a follow up of the government's fourth economic policy package.
Based on the fourth economic policy package, the government will apply three regulations on how to improve the welfare of workers through a formulated wage hike system, a way to improve their social life and a system to activate social dialogs at bipartite forums within companies.
The policy is included in the fourth installment of the government policy package issued on October 15, 2015. The government is now preparing draft government regulations on the new systems on improving the welfare of workers.
"The objective behind the wage formula is to increase employment opportunities as wide as possible for workers and laborers and to improve their welfare," Chief Economic Minister Darmin Nasution noted on Thursday (Oct.15).
He shed light on the government's policy on the minimum monthly wage, through a simple formula ensuring that workers would not receive a low salary; while on the other hand, the policy also offers certainty to the employers.
"The minimum wage will increase every year at a measured rate," Nasution revealed.
He said the formula for the salary hike next year is based on the monthly wage this year plus a percentage increase based on the rate of inflation and economic growth.
Nasution cited an example that if the inflation and economic growth this year are respectively five percent, the minimum monthly wage next year will be the amount of this year's minimum monthly wage plus 10 percent of this year's monthly salary.
Based on the policy package, the annual wage increase is formulated based on the formula "minimum wage + (minimum wage x (inflation percentage + economic growth percentage))".
He noted that for the time being, this formula cannot yet be applied in eight provinces as they still need a five-year transitional period to meet the required Decent Living Cost (KHL) standard before they can implement it.
However, for provinces which have not yet met their KHL standards, the wage increase is formulated as per the formula, "minimum wage +(minimum wage x (inflation percentage + economic growth percentage + 'annual road map plan rate of the regional government')).
The annual road map rate will depend on the governors of the provinces concerned.
Through the second policy on worker¿s social life, the government will strive to reduce the cost of living for the workers by issuing regulations related to cheap education, social security, low-cost housing, mass transportation modes and low interest smallholder business credits.
"This policy ensures that the state will grant protection to workers, in particular, when it comes to living costs," he said.
The third policy deals with the development and supervision of bipartite dialogs between employers and employees, he said.
The bipartite social dialog is the key to improving the workers' welfare by applying wage structure and deciding a scale as per which their wages are calculated, taking into account the period of work, post/class, education, competency, achievement and productivity. ***4***(A014/INE/B003)EDITED BY INE
(T.A014/A/BESSR/Bustanuddin) 26-10-2015 20:30: |
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