Indonesian Employers Group Says Proposed Minimum Wage Rise is Too High

MACROECONOMICS - JAKARTA. Indonesia's provincial minimum wage would rise by 5.3% to 7.3% next year under a new government rule, an increase that business thinks is too high, an official at the country's employers association APINDO said on Wednesday.

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On Tuesday, the manpower ministry outlined a new wage formula that includes inflation, economic growth and the contribution of labour to growth as inputs.

The average provincial minimum wage rise this year was 6.5%, with the average minimum wage at about 3.3 million rupiah ($198), ministry data shows.

"We consider that it's too high. Many companies couldn't even meet the minimum wage for this year," Bob Azam, APINDO's head of labour affairs, told Reuters.

Using the ministry's new rule, provincial governors have until December 24 to set the next year's wage increase for their region.

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The Labour Party, which represents unions, had sought an increase of at least 6.5% given the rate of economic growth this year. The party will release its response to the pay rule later on Wednesday, Chairman Said Iqbal said late Tuesday.

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