Indonesia caps minimum wage increase at 10% for 2023

INDONESIA announced a minimum wage increase for 2023 that was smaller than labour unions had demanded, risking protests by workers.

Minimum wages across Indonesia will rise by a maximum of 10 per cent next year, the Ministry of Manpower said, as it set a new formula for computing the increase. Provinces will have until Nov 28 and cities until Dec. 7 to decide minimum wage levels that will come into force on Jan 1.

“With the adjustment of the 2023 minimum wage formula, I hope that people’s purchasing power and consumption will be maintained and can increase economic growth and will eventually create jobs,” Minister Ida Fauziyah said in a Saturday briefing.

The increase falls short of the labour unions’ demand for as high as 25 per cent increase in minimum wages. Unions had urged the government to use a previous rule that would pave way for at least 13 per cent increase and also made a case for a 25 per cent jump citing double-digit food, fuel and housing inflation.

Consumer prices in Indonesia are hovering below 6 per cent, considered relatively low in Asia where neighbours Singapore and the Philippines are grappling with more than 7.5 per cent price growth.

The Confederation of Indonesian Trade Unions had threatened a protest march by five million workers if its demand wasn’t met. BLOOMBERG