This Is A Difference In The Calculation Of The Ciptaker Perppu And The Manpower Law

Illustration of wage calculations (Unsplash)

YOGYAKARTA President Joko Widodo (Jokowi) at the end of December 2022 issued a Regulation in Lieu of Law Number 2 of 2022 concerning Job Creation (Ciptaker). The issuance of this rule has drawn controversy, because there are differences in the calculation of the Regency/City Minimum Wage (UMK) when compared to Law Number 3/2003 concerning Manpower. So, how is the difference between the calculation of the UMK Perppu for Job Creation and the Employment Law?

When compared to Law Number 13 of 2003, Perppu Number 2/2003 removes 4 elements from the wage side.

In the Ciptaker Perppu, there are seven things that are used as aspect of wages, namely:

Meanwhile, in the Manpower Law, the wage policy includes 11 aspects, namely:

Next, in Perppu Number 2/2022 concerning Job Creation, there are 6 articles that are inserted between Article 88 and Article 89. The articles of insertion are Articles 88A, 88B, 88C, 88D, 88E, and 88F.

In Article 88F, it is stated that the minimum wage formula can be changed under certain circumstances. It reads as follows.

"Under certain circumstances, the government can determine a formula for calculating the minimum wage that is different from the formula for calculating the minimum wage as referred to in Article 88D paragraph 2."

In Article 88D of the Perppu, the minimum wage provision is calculated using a minimum wage calculation formula that takes into account variables of economic growth, inflation, and certain indexes.

Meanwhile, Law Number 3/2003 on Manpower does not include certain index elements in the formula for determining the minimum wage.

In Article 88 paragraph 4 of the Manpower Law it is said:

"The government sets the minimum wage as referred to in paragraph (3) letter a based on the needs of a decent life and taking into account productivity and economic growth."

On the other hand, Article 88C of the Ciptaker Perppu states that the governor is obliged to set the provincial minimum wage (UMP) and can set the district/city minimum wage (UMK). The determination of the UMK is carried out in terms of the results of the calculation of the UMK higher than the UMP.

Article 88C paragraph 4 of the Job Creation Perppu, reads:

"The minimum wage as referred to in paragraph (1) and paragraph (2) is determined based on economic and labor conditions."

The economic and employment conditions as referred to in paragraph 4 use data sourced from authorized institutions in the field of statistics.

The minimum wage applies to workers or laborers with less than one year of service. Entrepreneurs are prohibited from paying wages lower than the minimum wage.

This is information regarding the different calculations of the Employment Creation Perppu and the Manpower Law. Update on the latest developments in the situation is only on VOI.id.