Jakarta Globe is reporting that President Prabowo Subianto has directed his cabinet to implement the Constitutional Court’s ruling that annulled 21 articles of the Job Creation Law, stressing the need for regulations on the minimum wage by November 26.
After a cabinet meeting on Monday (4/11/24,) Justice Minister Supratman Andi Agtas confirmed that all ministers present agreed to execute the court’s decision. He highlighted the urgent requirement to establish wage regulations immediately, with the Ministry of Manpower responsible for determining the UMP.
“The UMP must be set in all provinces by November 26,” he said, noting that while this is a priority, other matters related to the ruling have a two-year timeline for new labor legislation.
According to Jakarta Globe, Manpower Minister Yassierli announced a deadline of November 7 for formulating wage regulation rules under the Job Creation Law. He emphasized the government’s commitment to respecting the court’s decision and incorporating its aspects into new regulations.
Yassierli has urged governors to finalize the provincial minimum wage (UMP) by November 21, with district and city minimum wage adjustments to follow by November 30. Labor unions are advocating for a 10 percent wage increase in 2025, but challenges persist in standardizing wage hikes across regions.
Indonesian Employers Association (Apindo) Chairwoman Shinta Kamdani pointed out that each region has its own wage-setting formula, making nationwide standardization impractical. Under Government Regulation No. 51 of 2023, minimum wage increases will be calculated based on inflation, economic growth, and an index coefficient, says Jakarta Globe.
Bob Azam, Apindo’s Employment Division Chairman, expressed concerns that the court’s ruling could lead to regulatory uncertainty, negatively impacting the investment climate. He emphasized that regulatory stability is crucial for businesses and investors planning for the long term.
Bob warned that without certainty, Indonesia risks losing its attractiveness as an investment destination, potentially slowing new capital inflows and affecting existing investments. He noted that the ruling will require businesses to reassess their conditions and future planning, particularly regarding operational costs, which could hinder competitiveness in a recovering economy, reports Jakarta Globe, adding that he also highlighted the importance of maintaining momentum in attracting strategic manufacturing and labor-intensive industries. With neighboring ASEAN countries like Malaysia, Thailand, and Vietnam successfully drawing multinational investments, strengthening Indonesia’s investment climate is increasingly urgent.
Jakarta Globe say that in addition to revising articles related to the minimum wage, the Constitutional Court addressed other contentious provisions on foreign workers and working days:
- Article 42, paragraph 4, of Article 81, point 4 of Law No. 6/2023: The provision allowing foreign workers to be employed only in specific job relationships for a limited time has been ruled inconsistent with the 1945 Constitution unless it emphasizes prioritizing Indonesian labor.
- Article 57, paragraph 1, of Article 81, point 13 of Law No. 6/2023: This article requiring fixed-term contracts to be in writing and in Indonesian has been deemed unconstitutional unless interpreted accordingly.
- Article 79, paragraph 2, letter b, of Article 81, point 25 of Law No. 6/2023: The requirement for one day of weekly rest for six working days has been ruled unconstitutional unless it allows for two days of rest for five working days.
Source: Jakarta Globe
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