TEMPO.CO, Jakarta - The Confederation of Indonesian Trade Unions (KSPI) and the Labor Party have urged the government to increase the Regency/City Minimum Wage (UMK) the Provincial Minimum Wage (UMP) by 8 to 10 percent in 2025.

KSPI and Labor Party President, Said Iqbal, justified the proposed increase by citing the cumulative inflation rate of approximately 7.7 percent over the past two years. While economic growth during this period reached 5.2 percent, the combined figure of 7.7 percent warrants a minimum wage adjustment of 8 to 10 percent.

“The initial proposed minimum wage increase is 8 percent, but KSPI recommends an additional 2 percent for regions with significant wage disparities between neighboring regencies/cities. This is expected to reduce regional wage disparities,” Iqbal stated in a written statement received by Tempo on Friday, September 27, 2024.

According to him, minimum wages across Indonesia have remained stagnant over the past five years, particularly in the initial year, leading to a decline in workers' purchasing power. In recent years, minimum wage increases have consistently fallen short of inflation rates.

“For example, in the Greater Jakarta (Jabodetabek) area, inflation reached 2.8 percent, while the wage increase was only 1.58 percent. This means that workers have less money each month,” Iqbal noted.

Despite annual increases in nominal wages, Iqbal emphasized that the real wages of workers have continued to decline. Over the past decade, real wages which were adjusted for the consumer price index have decreased by approximately 30 percent.

“The rise in prices of goods has far outpaced the increase in nominal wages, placing a continuous burden on workers and causing their purchasing power to plummet sharply,” he said.

In advocating for an 8 to 10 percent minimum wage increase in 2025, KSPI and the Labor Party rejected Government Regulation (PP) No. 51 of 2023. This regulation, based on the Omnibus Law on Job Creation, is currently being challenged through a constitutional review by KSPI, All Indonesia Workers Union Andi Gani (KSPSI AGN), and the Labor Party. 

Until a decision is reached by the Constitutional Court, the government should refrain from using PP No. 51 of 2023 in calculating the minimum wage for 2025.

Iqbal further mentioned that even with an 8 to 10 percent increase in 2025, workers' purchasing power would only increase by approximately 5 percent. Given the significant decline in purchasing power over the past decade, a much higher increase is necessary to mitigate the ongoing burden faced by workers.

“Laborers will continue to feel the burden as the wage increase is overshadowed by the increase in the consumer price index,” he concluded.

EKA YUDHA SAPUTRA

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