The Central Java Provincial Government has set the 2024 Provincial Minimum Wage (UMP) at Rp2,036,947.
This figure is a 4.02% increase, or Rp78,777 more than the 2023 UMP.
The Head of the Central Java Provincial Manpower and Transmigration Office, Ahmad Azis, stated that the UMP increase was calculated using a formula based on the previous year's minimum wage, plus adjustments for inflation, economic growth, and the alpha value.
The alpha value is an index determined by considering the level of labor absorption and average or median wages. Referring to Government Regulation (PP) Number 51 of 2023 concerning Wages, the alpha value ranges from 0.10 to 0.30.
"The increase in labor absorption and median wages during that period resulted in the alpha variable in Central Java being set at the highest figure of 0.30," said Azis.
He also stated that the increase in the Central Java UMP had been agreed upon in a plenary meeting of the Wage Council, which consists of members from the government, experts/academics, labor unions, and the Indonesian Employers Association (Apindo).
PP Number 51 of 2023 states that the minimum wage applies to workers with less than one year of service.
For workers with more than one year of service, wages are based on the company's established wage structure and scale.
Initially, based on the Manpower Law Number 13 of 2003, every employer was prohibited from paying employees less than the minimum wage.
However, this provision was changed through the Job Creation Perppu Number 2 of 2022 (Chapter IV Employment Article 90B) which reads: "The minimum wage provisions as referred to in Article 88C paragraph (1) and paragraph (2) are exempted for micro and small businesses".
Therefore, business entities categorized as "micro" and "small" are no longer required to comply with the minimum wage regulations.
Based on PP Number 7 of 2021, the criteria for "micro businesses" are those with a maximum capital of Rp1 billion (excluding land and buildings used for the business), or annual sales of a maximum of Rp2 billion.
The criteria for "small businesses" are those with capital >Rp1 billion to Rp5 billion (excluding land and buildings used for the business), or annual sales >Rp2 billion to Rp15 billion.