Minimum Wage In 2021 Does Not Increase, Sri Mulyani: The Government Wants To Save Employees

Minister of Finance, Sri Mulyani. (Photo: Instagram @smindrawati)

JAKARTA - The minimum wage in 2021 will not increase. This means that the value of the minimum wage next year will be the same as in 2020. This decision has received a reaction from the labor unions, they are worried that it will further hit people's purchasing power, which is currently low.

Minister of Finance Sri Mulyani spoke about this. According to him, the government will continue to encourage people's purchasing power to be maintained. One of them is through various social assistance (bansos) in the national economic recovery program.

Sri said that he understood the current situation of many parties under pressure due to the pandemic. However, according to him, the government must continue to find a balance point so as not to have a worse impact, namely termination of employment (PHK).

Furthermore, Sri Mulyani said, the government decided not to raise the minimum wage next year, because of the difficult economic and corporate conditions due to the COVID-19 pandemic.

"The fiscal role is to act as a bridge there, so that one policy does not cause the company to become weaker or deeper, in this case workers may be laid off. The government is looking for a balance point with various instruments, UMP or minimum wage is one part," he said, in a video conference, Tuesday, October 27.

Sri Mulyani explained that the government had extended various social assistance programs to support purchasing power. The total that has been disbursed for social assistance spending until the end of September 2020 is IDR 240 trillion.

These programs include the additional Family Hope Program (PKH), increased basic food assistance, Jabodetabek and non-Jabodetabek social assistance, pre-employment cards, electricity discounts, internet quota subsidies, to internet assistance for students and honorary teachers.

"This is all to cover the people's purchasing power without being a burden to the business sector which is currently under pressure," he said.

Sri Mulyani said, various kinds of direct assistance to the community issued by the government are expected to help increase purchasing power. He said, although the provincial minimum wage (UMP) for workers did not increase in 2021, workers received salary assistance from the government.

"Including salary assistance to those whose income is below Rp. 5 million. That goes to our people's accounts and is expected to increase their purchasing power," he said.

For your information, the government has decided not to raise the minimum wage next year because of the difficult economy and companies due to the pandemic. This provision is contained in the Circular (SE) of the Minister of Manpower of the Republic of Indonesia Number 11 / HK04 / X / 2020 concerning the Determination of the Minimum Wage in 2021 during the COVID-19 Pandemic.

Workers Threaten to Hold Demonstrations

The Confederation of Indonesian Workers Unions (KSPI) regrets the attitude of the Minister of Manpower who issued a circular asking governors to make adjustments to the determination of the minimum wage in 2021 to equal the value of the 2020 minimum wage.

The decision is contained in Circular Letter (SE) Number M / 11 / HK.4 / x / 2020 dated October 26, 2020. Through this letter, governors are also asked to determine the minimum wage after 2021 in accordance with the provisions of laws and regulations, and stipulate and announce the 2021 Provincial Minimum Wage on 31 October 2020.

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The President of KSPI Said Iqbal said, with the issuance of this circular, the workers' resistance action will be even stronger against the rejection of the absence of a 2021 minimum wage increase and the rejection of the Omnibus Law on Cipta Kerja.

Iqbal said that the KSPI and all labor unions in Indonesia will carry out massive national actions in 24 provinces on November 2 and November 9 to 10 which will be attended by tens and even hundreds of thousands of workers.

This demonstration will be centered at the Constitutional Court, Palace, DPR RI, and at Governor's offices throughout Indonesia with the issue of canceling the Omnibus Law on Employment and there must be an increase in the 2021 minimum wage to maintain people's purchasing power.

Because of that, Iqbal said, KSPI asked the governors to ignore the circular of the Minister of Manpower Ida Fauziyah in setting the 2021 minimum wage.

"Menaker does not have the sensitivity of the fate of workers, only looks at the interests of employers," he said, in a written statement received by VOI, Tuesday, October 27.

Four Reasons for 2021 Drinking Wages to Increase

KSPI, Said Iqbal said, there are four reasons why the 2021 minimum wage must increase. First, if the minimum wage doesn't increase, it will only make the situation even hotter. Moreover, currently workers are still fighting for rejection of the Omnibus Law on Job Creation.

Said Iqbal said, along with the rejection of the omnibus law, workers will also voice so that the 2021 minimum wage continues to rise. So that the actions will be even bigger.

Second, the reason wages are not rising is because currently minus economic growth is not correct. This can be compared with what happened in 1998, 1999, and 2000.

"For example, in DKI Jakarta, the minimum wage increase from 1998 to 1999 continued to increase by around 16 percent, whereas the economic growth in 1998 was minus 17.49 percent. Likewise with the 1999 to 2000 minimum wage, the minimum wage still increased by around 23, 8 percent, whereas the economic growth in 1999 was minus 0.29 percent, "he said.

Third, if the minimum wage does not increase, the people's purchasing power will decrease. Declining purchasing power will result in a fall in the level of consumption. In the end, it has a negative impact on the economy.

Fourth, not all companies are struggling due to the COVID-19 pandemic. Therefore, he asked for the wage increase policy to be carried out proportionally.

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