Minimum Wage Rises, Kadin Asks The Government To Adjust To Sectoral Conditions And Give Incentives To Certain Industries

Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Arsjad Rasjid. (Photo: Doc. Antara/Kadin)

Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Arsjad Rasjid requested that the policy of increasing the minimum wage set by the government be adjusted to conditions in each sector so as not to be counterproductive.

"We appreciate the government's policy regarding the increase in the minimum wage. However, it must be realized that not all sectors have the same growth and business climate today. The policy of increasing the minimum wage in one period should target industries with the largest rate of economic growth or winning industry in that period. If not, the wage increase policy will burden business actors," he said in a statement quoted by Antara, Tuesday, November 22.

Arsjad does not deny that global economic challenges triggered by geopolitical conflicts continue to trigger a surge in inflation which has an impact on rising prices for basic commodities and people's purchasing power. On the other hand, with the same challenges, the domestic industry also feels different impacts.

According to him, the government needs to formulate a more targeted wage policy, in line with the economic growth and character of each industrial sector.

The wage policy also needs to be fair, which does not burden business actors and does not harm the workforce or laborers. The reason is, both business actors and labor, both are cycles of economic growth that cannot be separated.

In line with that, the minimum wage policy should be accompanied by the provision of incentives targeted at certain industries and precise targets in accordance with sectoral conditions.

Labor-intensive industries that absorb more labor and create jobs are different from capital-intensive industries that rely on technology and large capital.

Meanwhile, export-oriented industries such as footwear and clothing industries are different from imported-oriented industries, such as food and drinks that rely on package raw materials, the plastics industry, and electronic equipment.

"In a situation where the global economy will continue to weaken next year, we hope that the wage increase policy will be accompanied by providing incentives for industries affected by global economic turmoil, such as labor-intensive industries and export-oriented industries," he said.

Arsjad emphasized that business continuity in the midst of the current economic situation is important to be protected in order to ensure the availability of jobs, reduce unemployment, and improve people's welfare.

Therefore, his party prioritizes social dialogue and deliberation for consensus in order to reach the middle point between labor and industry.

Previously, the Regulation of the Minister of Manpower Number 18/2022 concerning the Determination of the 2023 Provincial Minimum Wage stipulated that the adjustment of the minimum wage value should not exceed 10 percent.

The increase in the 2023 UMP, which should not exceed 10 percent, takes into account the considerations of socio-economic conditions in each region. In addition, there is a calculation formulation based on the consideration of variables for economic growth, inflation, and certain indexes.

The applicable UMP as of January 1, 2023 will be set and announced no later than November 28, 2022 by the Governors of each region.