Businessicy – Minister of Manpower Ida Fauziyah has stated that the administration of President-Elect Prabowo Subianto and Vice President-Elect Gibran Rakabuming Raka will likely increase the provincial minimum wage (UMP). Ida confirmed that the decision regarding the increase in the UMP would not be made during her tenure, as her position will conclude in October 2024. Given the remaining time of her service, the discussion on the UMP increase will be conducted at the beginning of the Prabowo-Gibran administration. Ida noted that the announcement is typically made in November each year.
“It is usually announced in November. It will definitely be announced during Prabowo’s administration,” she said.
Ida further explained that, so far, there has been no discussion regarding the UMP increase. She mentioned that there has been no consultation with the transition team about the potential wage hike.
“It’s not the time yet (to discuss it). According to the cycle of minimum wage discussions, it’s not the time yet. This is still August,” she concluded.
Wages are a critical aspect of the labor market. Generally, wages are the basic compensation given to workers based on their level or type of work. Wage determination is typically based on mutual agreements. The Provincial Minimum Wage (UMP) and the Regency/City Minimum Wage (UMK) are two terms frequently encountered in Indonesia’s labor sector. Although both relate to the minimum wage that must be paid to workers, there are significant differences between UMP and UMK that are important for both workers and employers to understand.
UMP is the minimum wage set by the provincial government and applies to the entire region within that province.
It serves as the basic reference for setting wages in various regencies/cities within the same province.
Meanwhile, UMK (Regency/City Minimum Wage) is the minimum wage set for each regency or city within a province.
UMK is determined based on the economic conditions and minimum living needs in that area, allowing it to vary between different regencies/cities within the same province.
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UMP is set by the governor based on recommendations from the Provincial Wage Council.
These recommendations take into account factors such as inflation, economic growth, and the socio-economic conditions of the province.
The determination of UMP is regulated by Government Regulation (PP) No. 36 of 2021 concerning Wages. Which was later revised by PP No. 51 of 2023. This regulation stipulates that UMP must be set based on a formula that includes variables such as inflation, economic growth, and specific indices.
Meanwhile, the determination of UMK is also regulated under PP No. 36 of 2021 concerning Wages, with an emphasis on adjusting the minimum wage more specifically according to the economic and social conditions at the regency/city level.
The UMP aims to provide a minimum wage standard that can be generally applied throughout the province. This helps ensure that workers in areas with relatively weaker economic conditions still receive a fair wage. On the other hand, UMK offers greater flexibility in setting the minimum wage, as it can be adjusted according to the specific conditions in each regency/city. Thus, the UMK can more accurately reflect the cost of living and economic conditions in the area.
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