Indonesia sets 10% ceiling on wage hike for 2023

Indonesia has set a wage ceiling of 10% on minimum wage raises next year, which could see salaries in cities like Jakarta reach Rp5 million (US$318.2) a month.

Provincial governments will have to decide on next year’s minimum wage rates by no later than November 28, while the deadline to decide the minimum wage levels at the district and municipality levels falls on December 7, according to the signed decree. 

“If the formulated adjustment to the minimum wage exceeds 10%, the governor must determine the minimum wage with an adjustment of 10% maximum,” read the decree, reported Jakarta Globe.

Adjustments to the minimum wage are determined by combining inflation, economic growth, and the productivity at work factor of the respective province. When the local economy is in contraction, the planned minimum wage hike should then consider the inflation rate only.

READ: Indonesia considers minimum wage hike in 2023

If the 10% wage hike is imposed, Jakarta and two industrial districts in West Java — Karawang and Bekasi — could see their minimum wage exceed Rp5 million. Currently, the lowest wages a worker could receive in the three locations are Rp4.7 million (US$299).