After two days of demonstrations by tens of thousands of Indonesian workers, the Governor of Jakarta (Joko Widodo) raised the capital's minimum wage to IDR 2.4 million (USD $213) per month. The new minimum wage, proposed by the Jakarta Wage Council, will be implemented in 2014 and constitutes a 10% increase from the current minimum wage of IDR 2.2 million. The workers, however, had demanded for a minimum wage of IDR 3.7 million causing various institutions and analysts to express concerns about the impact on the investment climate.
A significant rise in the level of minimum wages would have been a problem for entrepreneurs and investors. Last year, Jakarta's minimum wage had already been raised by 44% and implied a burden for entrepreneurs. Although the government provides a waiver for companies that cannot afford the higher minimum wage, it has been reported that there have been serious delays in these disbursements.
Indonesian workers across the country demanded for higher minimum wages due to the country's recent high inflation rate which curbs people's purchasing power. Yesterday (01/11), Statistics Indonesia announced that the country's inflation rate reached 8.32 percent (year-on-year) in October 2013.
Regional Minimum Wages in Indonesia:
|Province|| Minimum Wage 2013
||Minimum Wage 2014|
|DKI Jakarta||IDR 2.2 million||IDR 2.4 million|
|Central Kalimantan||IDR 1.6 million||IDR 1.7 million|
|West Kalimantan||IDR 1.1 million||IDR 1.4 million|
|Jambi||IDR 1.3 million||IDR 1.5 million|
|Southeast Sulawesi||IDR 1.1 million||IDR 1.4 million|
|West Sumatra||IDR 1.4 million||IDR 1.5 million|
|Bangka Belitung||IDR 1.3 million||IDR 1.6 million|
|Papua||IDR 1.7 million||IDR 1.9 million|
|Bengkulu||IDR 0.9 million||IDR 1.4 million|
|Nusa Tenggara Barat||IDR 1.1 million||IDR 1.2 million|
|Banten||IDR 1.2 million||IDR 1.3 million|
|South Kalimantan||IDR 1.3 million||IDR 1.6 million|
|Riau||IDR 1.4 million||IDR 1.7 million|
|East Kalimantan||IDR 1.8 million||IDR 1.9 million|
Source: Investor Daily