Red Carpet for The Low-Wage

The Constitutional Court’s decision stipulating Law no. 11/2020  concerning conditional unconstitutional job creation and the  determination of the 2023 UMP (Provincial Minimum Wage), which has  an average increase of around 7.25 percent based on Permenaker No.  18/2022, no longer based on PP No. 36/2021.

Which is a derivative of Law  no. 11/2020, had given rise to optimism that the government would no  longer adopt a policy of low labor wages as the primary strategy for  attracting investment and creating jobs. However, the issuance of  Perppu No. 2/2022 concerning Job Creation counteracts this  expectation.

In addition to considering the factors of economic growth  and inflation, the determination of the minimum wage in the Job  Creation Perppu also takes into account a “certain index,” which tends to  be a discretionary space for the government to keep the minimum wage  low. Even the Job Creation Perppu also stipulates that the government  has the right to change the formula for determining the minimum wage  under “certain conditions,” which are very open to broad interpretation.  The low wage regime continues to be the leading spirit of the Job  Creation Perppu.