Indonesia Employment Law Update: Amendment to Wages Regulation and Minimum Wage Regulation in Nusantara

On November 10, 2023, the Indonesian Government issued Government Regulation No. 51 of 2023 concerning Amendments to Government Regulation No. 36 of 2021 concerning Wages ("GR 51").

GR 51 provides certainty that there will be adjustments to the minimum wage every year, for both provincial minimum wages and district/city minimum wages. The adjustment is determined by the relevant governor based on economic and employment conditions. According to Article 26 of GR 51, the formula to calculate the minimum wage takes into account economic growth, inflation, and certain indices.

GR 51 also regulates that provincial governors must determine the provincial minimum wage no later than November 21 of the current year, with the adjusted minimum wage to take effect from January 1 of the following year. Meanwhile, the district/city minimum wage shall be determined by a governor's decision no later than November 30 of the current year. On a separate note, the DKI Jakarta Government recently announced that the monthly minimum wage for DKI Jakarta in 2024 will be IDR 5,067,381, an increase of 3.6%, or IDR 165,583, from 2023.

What is interesting about the publication of GR 51 is that there are provisions regarding minimum wages that apply in Indonesia’s future capital, Nusantara. In accordance with Law No. 3 of 2022 dated February 15, 2022, concerning the National Capital, Nusantara is designated as the new capital of Indonesia to replace Jakarta.

According to GR 51, Nusantara's minimum wage will be regulated by the Head of the Nusantara National Capital Authority following the actual realization of the relocation of the capital. Please note, the decision to move the capital is still awaiting the relevant presidential decree, which could be issued in August 2024.

Further, in accordance with Article 81 C of GR 51, the minimum wage in Nusantara currently follows the minimum wage for Penajam Paser Utara and Kutai Kertanegara districts set by the Governor of East Kalimantan Province. In general, East Kalimantan's monthly minimum wage in 2024 will be IDR 3,360,858, an increase of 4.98 percent from IDR 3,201,396 in 2023.

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