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2023 Adjustment of Minimum Wage for Workers in Indonesia

A new year reflects business progress and continuity for both business actors and workers. Along with economic development in Indonesia, more job opportunities are open for the public and the wages of workers shall be at the standardized Minimum Wage. If business actors do not heed the wage provisions stipulated in the Minister of Manpower Regulation No. 18 of 2022 concerning the Determination of the 2023 Minimum Wage by law in Indonesia ("MoMR 18/2022"), then the sanctions are contained in Law No. 11 of 2020 concerning Job Creation jo. Law No. 13 of 2003 with regards to Manpower apply, namely imprisonment for a minimum of one year and a maximum of four years and/or a fine of at least IDR100,000,000 and a maximum of IDR400,000,000.

Minimum Wage, as stipulated under Article 1 of MoMR 18/2022, is the lowest monthly wage set by the Governor as a safety net. The central government determines the Minimum Wage policy of 2023 as one effort to realize Workers'/Laborers' rights to a decent living. Following Article 4 of MoMR 18/2022, the Minimum Wage applies to Workers/Labors working for a period of less than one year for the company concerned, though Workers/Labors with less than a one year working period who possess specific qualifications can be given a wage greater than the stated Minimum Wage. Specific qualifications as referred include:

  1. education;
  2. competence; and/or
  3. work experience required to perform a job or position.

Furthermore, Article 5 of MoMR 18/2022 states that the Minimum Wage consists of Provincial Minimum Wage and Regency Minimum Wage, and that determination of the Minimum Wage is carried out for:

  1. Provinces that have set a Minimum Wage;
  2. Regencies/cities that have not yet set a Minimum Wage.

Regions that have yet to set a Minimum Wage shall implement the stipulated Minimum Wage in which the calculation of the Minimum Wage shall have the variable of inflation and economic growth of each province and regency/city. The variable of economic growth and inflation are sourced from the authorized institution in the field of statistics (Statistics Indonesia or Badan Pusat Statistik). The governor shall appoint the provincial and regency/city minimum wage, and the 2023 provincial minimum wage shall be set no later than 28 November 2022 and the 2023 regency/city minimum wage shall be set no later than 7 December 2022. This ultimatum is stipulated under regulation in Indonesia and shall be in force by 1 January 2023.

Article 7 of MoMR 18/2022 mentioned that the determination of adjustments to the nominal/value of the Minimum Wage may not exceed ten percent. If the result of calculating the value adjustment of the Minimum Wage exceeds ten percent, the Governor shall determine the Minimum Wage with a maximum adjustment of ten percent. Furthermore, if the economic growth is negative, adjustment of the Minimum Wage value only considers the inflation variable. Provincial Minimum Wage for provinces formed from expansion shall use the parent province’s Minimum Wage.

If you have further inquiries about the topic explained above, Schinder Law Firm is one of many corporate law firms in Indonesia that have handled a lot of similar matters, with many experienced and professional civil lawyers and dispute lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author: Dewi Susanti