Minimum wage and the welfare of Indonesian workers

The third in a series of Occasional Discussion Papers launched by the ILO Jakarta Office in the Spring of 1999 to assist Indonesia with ideas and analysis which could contribute to its uphill task of recovery from the socially devastating financial crisis.

The paper argues that neither theory nor comparative evidence allows one to be dogmatic about the employment effects of a minimum wage policy. The core issue is not whether the imposition of minimum wages destroys jobs, but how best to assist the ‘working poor’, that is, those who are employed, but cannot earn enough to afford the basic necessities of life.