27-11-2024 (JAKARTA) Indonesian business leaders are advocating for maintaining the current minimum wage calculation method for 2025, following recent court-mandated changes to labour legislation.
The call for stability comes as Indonesia grapples with the implications of an October Constitutional Court ruling that mandates significant modifications to the 2020 Job Creation law, including the introduction of sector-specific minimum wages.
Speaking at a press briefing on Tuesday evening, Employers Association (Apindo) chairwoman Shinta Kamdani expressed concerns about the impact of frequent policy adjustments on the investment climate. “Persistent alterations to the wage formula are creating a cloud of uncertainty for investors who are vital to job creation in our economy,” Kamdani remarked.
The current average minimum wage stands at 3.1 million rupiah (S$262) per month, according to official government statistics. The administration is scheduled to announce the 2025 minimum wage adjustments before the close of 2024.
The October court ruling has sparked divergent interpretations among stakeholders. Labour organisations interpret the verdict as a mandate to incorporate workers’ basic needs into wage calculations, alongside existing factors such as economic growth and inflation rates. These groups are pushing for a substantial 10% increase in minimum wages for 2025, threatening industrial action if their demands are not met.
However, Apindo has urged policymakers to consider the broader economic context, particularly the looming threat of a global economic downturn. The business association emphasised that numerous companies are still struggling to recover from the financial impact of the COVID-19 pandemic.
