Indonesian UMP Rises Rp2.5 Million in 20 Years

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Adi Ahdiat 21/11/2023 11:46 WIB

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Indonesia's average UMP increased by approximately 605% between 2003 and 2023, or by Rp2.5 million in the last 20 years.

Average Indonesian Provincial Minimum Wage (2003-2023)

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Average Indonesian Provincial Minimum Wage (2003-2023)

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Provincial Minimum Wage (UMP) is the lowest wage standard applicable to all regencies/cities in a province.

Every year, the provincial government sets UMP increases that vary, taking into account the inflation rate, economic growth, and various other employment indicators.

According to data from the Ministry of Manpower collected by the Central Bureau of Statistics (BPS), in 2003 the average UMP across all Indonesian provinces was Rp414,700.

The figure then continued to rise in subsequent years, until the national average UMP reached Rp2.92 million in 2023.

Cumulatively, the average Indonesian UMP grew by approximately 605% during the 2003-2023 period, or an increase of Rp2.5 million in the last 20 years.

Detailed by year, the highest UMP increase in the last two decades was recorded in 2014.

At the end of President Susilo Bambang Yudhoyono's (SBY) administration, the average Indonesian UMP increased by 22% from Rp1.29 million (2013) to Rp1.58 million (2014).

Then the lowest increase was recorded during the Covid-19 pandemic, when the average Indonesian UMP only increased by 0.57% from Rp2.67 million (2020) to Rp2.68 million (2021).

During President SBY's administration (2004-2014), the national average UMP increased in the range of 8-22% per year.

Meanwhile, during President Jokowi's administration (2015-2023), the UMP increase rate was lower, ranging only between 0.5-13% per year.

Government Regulation (PP) Number 51 of 2023 states that the minimum wage applies to workers/laborers with less than 1 year of work experience.

Then for workers/laborers with more than 1 year of work experience, their wages are guided by the wage structure and scale created by the company.

Previously, based on 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".

Thus, business entities categorized as "micro" and "small" are no longer required to follow 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 business), or annual sales of a maximum of Rp2 billion.

Then the criteria for "small businesses" are those with capital >Rp1 billion to Rp5 billion (excluding land and buildings used for business), or annual sales >Rp2 billion to Rp15 billion.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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Indonesian UMP Rises Rp2.5 Million in 20 Years

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