Indonesia - Minimum Wages - 2011

Law on Manpower Affairs, Act No. 13 of 2003, dated 25 March 2003 (State Gazette of 2003) Unofficial translation prepared by ILO Jakarta.

Decision of the President of the Republic of Indonesia concerning the Wage Council, GR No.107 of 2004 dated 18 October 2004. Published by Ministry of Manpower and Transmigration and ILO Jakarta in Labour Regulations, 2005, Jakarta, Indonesia, ISBN: 92-2-017414-6.

Regulation of Minister of Manpower and Transmigration concerning the procedure of proposing candidates for membership of the National Wage Council, MR No. 03/MEN/I/2005. Published by Ministry of Manpower and Transmigration and ILO, Jakarta in Labour Regulations, 2005, Indonesia.

Decision of Minister of Manpower and Transmigration concerning procedures for postponing the application of the Minimum Wage, No. Kep. 231/Men/2003. Published by Ministry of Manpower and Transmigration and ILO Jakarta in Labour Regulations, 2005, Jakarta, Indonesia, ISBN: 92-2-017414-6

Minimum Wages, Regulation of the Manpower Minister No. Per-01/Men/1999,
Business News, 26 February 1999, Nos. 6278-80, as amended by the Decree No. Kep. 226/Men/2000 (Business News, 1 November 2000, Nos. 6536-6537).

Government Regulation No. 8 of 1981 on the Protection of Wages,
State Gazette No. 8 of 1981.

Regulations of the Governor of Jakarta Capital Special Region No. 143/2007 (UMP),
Business News, 2007-11-07, No. 7582-7583, LI, pp. 15A-16A, in force from 1 January 2008.

Stipulation of Regental/Municipal Minimum Wages in East Java in 2008,
No. 188/399/KPTS/013/2007.

Stipulation of West Kalimantan Provincial minimum Wage (UMP) and Sectoral Minimum Wage (UMSP) Year 2009,
Decision of the Governor of West Kalimantan No. 740 of 2008, Business News, 2009-01-21, No. 7763-7764.

Stipulation fo the Provincial, Sectoral and Sub-Sector Minimum Wages in the Province of North Maluku for 2008,
Governor`s Decision No. 186.1/KPTS/MU/2007, Business News, 2008-03-14, No. 7637, LI, pp. 1A-4A.

Decision of the Minister of Manpower and Transmigration concerning regulation on the structure and scale of wages, MOMT Decree No 49/MEN/IV/2004. Published by Ministry of Manpower and Transmigration and ILO Jakarta in Labour Regulations, 2005, Jakarta, Indonesia, ISBN: 92-2-017414-6.

Regulation of the Minister of Manpower and Transmigration regarding implementation and component of achievement scale on adequate living needs (ALN), PER 17/MEN/VIII/2005. Published by Wordpress at http://adhipranoto.wordpress.com/indonesia-labour-law and accessed 26 July 2011.

Provincial Minimum Wage 2010, as published by www.wageindicator.org and accessed 26 July 2011

A worker (pekerja) / labourer (buruh) is every person who works for a wage or other forms of remuneration.

An employer (pemberi kerja) shall refer to individuals, entrepreneurs, legal entities, or other bodies that employ manpower by paying them wages or other forms of remuneration.

An entrepreneur (pengusaha) shall be defined as:
a. An individual [proprietor], a partnership or a legal body that runs an enterprise that he or she or it owns;
b. An individual, a partnership or a legal body that independently runs an enterprise that does not belong to him, her or it.
c. An individual, a partnership or a legal body that is situated in Indonesia but represents an enterprise as referred to under point a and point b that has its seat/ base outside the territory of Indonesia.

An enterprise (perusahaan) shall refer to:
a. Every form of business [undertaking], which is either a legal body or not, which is owned by an individual, a partnership or a legal body that is either privately owned or state owned, which employs workers/ labourers by paying them wages or other forms of remuneration;
b. Social undertakings and other undertakings with officials in charge and which employ people by paying them wages or other forms of remuneration.

A wage (upah) is the right of the worker/ labourer that is received and expressed in the form of money as remuneration from the entrepreneur or the employer to workers/ labourer, whose amount is determined and paid according to a [formal and written] work agreement (perjanjian kerja), a deal (kesepakatan), or laws and regulations, including allowances for the worker/ labourer and their family for a job and or service that has been performed or will be performed.

The minimum wage is set at a regional level by the Governor, following recommendations from the Provincial and/or District Wage Council(s) and in accordance with the National Government’s wage policy.

The minimum wage is set at a provincial level, and may be further set at sectoral levels, by Governors following recommendations by provincial wage councils. The minimum wage is to be based on the needs for a decent living, taking into account productivity and economic growth.

The minimum wages shall be determined/ fixed by Governors after considering recommendations from Provincial Wage Councils and/or District Heads/ Mayors. The minimum wage is to be set in each province or district, and (where applicable) in each sector, in accordance with the National Government’s wage policy, which shall be directed at ensuring that workers earn a living that is decent from the viewpoint of humanity.

For the purposes of establishing the National Government’s wage policy and providing recommendations to the provincial Governors, a National Wage Council, Provincial Wage Councils and District Wage Councils shall be established. These Wage Councils shall have representatives from the government, entrepreneurs’ organizations, trade/ labour unions, universities and experts as their members.

The ratio of Government representatives, trade union/labour representatives and employer organisation representatives shall be 2:1:1 and the number of members from Universities and experts shall be adjusted to need. The total number of members shall always be odd.

Each Wage Council is to meet at least once every 3 months and report to their relevant Government at least once a year. The report is to take the form of recommendations as suggestions and considerations in order to formulate wage policies.

The adequate living needs (ALN) standard is to meet the adequate living requirements of a single worker/labourer.

The ALN is to be derived from a cost survey, to be conducted at a provincial level.

Consideration should be given to the level of economic development and per capita income.

Consideration should be given to the condition of the labour market.

Consideration be given to corporate capability, development and sustainability.

When setting provincial or regency wages by sector, research should be carried out on the homogeneity of companies, the number of companies, the number of workers, the foreign exchange generated, the capability of companies, associations of companies and relevant worker’s associations.

It is intended that the minimum wage applies only to workers/labourers with less than a year’s service, and that wages for workers with more than 1 year’s service be discussed bipartitely between workers/labourers or their union and the relevant company management.

Only entrepreneurs are prohibited from paying less than the minimum wage. As a result, any worker performing work for an employer that does not operate an enterprise (e.g. many domestic workers) is not protected by the minimum wage provisions of the Law on Manpower Affairs 2003.

The legislation provides for exceptions to be made for companies who are not in a position to pay minimum wage. An application for postponement must be made and an agreement must be reached between employers and employees. Approval for any postponement that must be given by governors cannot exceed 12 months.

No specific minimum wage by occupation identified.

Many provinces have set a basic minimum wage which applies to all sectors. However, provinces are entitled to set separate minimum wages for each sector on the basis of agreements between corporate organisations and worker unions/labour federations. Several provinces have set sectoral minimum wages for agriculture, mining, manufacturing, utilities, forestry and rubberware industries among others.

Each of the 30 regions in Indonesia is autonomous, with the Governor having the power to revise minimum rates of pay each year if necessary.

Domestic workers who are employed by private households will not be covered by the minimum wage protections of the Law on Manpower Affairs.

No

No

The legislation sets forth the method of calculating minimum wage rates for freelancing daily workers (who are working for one month or more) in accordance with the number of days the workers are present.

Piece-rate workers are covered by the minimum wage if working for one month or more.

Workers who are on a period of probation are also entitled to receive the relevant minimum wage.

Rp. 1,290,000 per month in Jakarta Capital Special Region
Rp. 1,410,000 per month in Papua Barat (highest minimum wage rate)
Rp. 675,000 per month in East Java (lowest minimum wage rate)

2011

Part of wages may be paid in a form other than money, but the value may not exceed 25 % of the wage that should be received.

Wages may be paid on a weekly (or fortnightly) basis on the condition that the calculation is based on the monthly wages.

Yes

Wages may be paid on a weekly or fortnightly basis on the condition that the calculation is based on the monthly wages.

No relevant provision identified.

Failure to pay the relevant stipulated minimum wage can be penalized with a maximum fine of Rp. 100,000. A judge may also direct that the outstanding wages should be paid to the worker concerned.

Failure to pay the relevant stipulated minimum wage can be penalized with a maximum prison term of three months.