Legal Literacy - This article discusses the enactment of minimum wages for laborers in Micro and Small Enterprises in Indonesia.

Definition of Minimum Wage

The Provincial Minimum Wage (UMP) for 2023 was determined in all provinces in Indonesia on November 28, 2022. The definition of minimum wage itself is mentioned in the Regulation of the Minister of Manpower Number 18 of 2022 concerning the Provincial Minimum Wage for 2023 in Article 1 number 1 that the minimum wage is the lowest monthly wage set by the Governor as a safety net. The minimum wage consists of two types, namely the Provincial Minimum Wage and the Regency/City Minimum Wage. The determination of the regency/city minimum wage is after the determination of the provincial minimum wage. The amount of the minimum wage is regulated based on economic and employment conditions.[1]

Minimum Wage Policy

The Minimum Wage policy for 2023 is determined by the central government in order to realize the rights of workers/laborers to a decent living for humanity. Furthermore, the regional government implements the policy The 2023 Minimum Wage must adhere to ministerial regulations, namely the Regulation of the Minister of Manpower Number 18 of 2022 concerning the Provincial Minimum Wage for 2023.

Prohibition of Paying Low Wages

In essence, employers are prohibited from paying workers/laborers lower than the minimum wage that has been set. The prohibition for employers to pay wages lower than the minimum wage is mandated in Article 88E paragraph (2) of Law Number 13 of 2003 concerning Manpower which is regulated in Article 81 number 25 of Law Number 11 of 2020 concerning Job Creation. As for the sanctions for employers who pay wages lower than the minimum wage, it is regulated in Article 81 number 63 of Law Number 11 of 2020 concerning Job Creation, namely employers are subject to sanctions imprisonment for a minimum of one year and a maximum of four years and/or a fine of at least Rp. 100,000,000.00 (one hundred million rupiah) and a maximum of Rp. 400,000,000.00 (four hundred million rupiah).

Minimum Wage for Micro and Small Enterprises

Based on Article 81 number 28 of the Job Creation Law which contains new Article 90B paragraph (1) of the Manpower Law, it is stated that the minimum wage provisions are excluded for Micro and Small Enterprises, then the determination of wages for micro and small enterprises is regulated based on an agreement between the employer and the worker/laborer in the company. The wage agreement between the employer and the worker/laborer is at least 50% of the average community consumption at the provincial level and the agreed wage value is at least 25% above the poverty line at the provincial level based on data sourced from authorized institutions in the field of statistics.[2] Based on Article 38 of Government Regulation Number 36 of 2021 concerning Wages, the criteria for micro and small businesses that are excluded from the minimum wage provisions must consider factors, namely that the business relies on traditional resources and/or does not operate in businesses with high technology and is not capital intensive. This infographic will help understand the importance of and the implementation of the 2023 Minimum Wage Policy in Indonesia, which is determined by the central government and implemented by the regional government.
 
 
Infographic on Minimum Wage Regulation for MSME Sector
Infographic by the Author

References

[1] Article 5 paragraph (2) of the Regulation of the Minister of Manpower Number 18 of 2022 concerning the Provincial Minimum Wage for 2023. [2] Article 36 paragraphs (2) and (3) of Government Regulation Number 36 of 2021 concerning Wages. *This article is the personal opinion of the author and does not represent the views of the editorial staff of Literasi Hukum Indonesia.