According to the Central Bureau of Statistics (BPS), as of August 2023, there were approximately 52.7 million workers in Indonesia with the status of laborer/employee.
Of these, 47.13%, or approximately 24.84 million people, received salaries below the provincial minimum wage (UMP).
Those receiving salaries above the UMP comprised 52.87%, or approximately 27.86 million people.
The average UMP in Indonesia in 2023 was Rp2.92 million per month.
Previously, based on the Manpower Law Number 13 of 2003, every business entity was prohibited from paying employees below the minimum wage.
However, this provision has been amended through the Job Creation Perppu Number 2 of 2022 (Chapter IV Employment Article 90B), so that the minimum wage provision is exempted for micro and small businesses.
In other words, business entities categorized as micro and small businesses can now pay employee salaries lower than the UMP.
Based on Government Regulation 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 up to Rp5 billion (excluding land and buildings used for the business), or annual sales >Rp2 billion up to Rp15 billion.