Jakarta’s minimum wage hike faces backlash

Jakarta’s move to raise the region’s minimum wage by 5.1% has been faced with resistance from business groups, warning that the move would cause headwinds to foreign investment. 

In November, the monthly minimum wage in the city was set to increase by 0.85% to 4.45 million rupiah (US$312) in 2022. However, Jakarta Governor Anies Baswedan told reporters that the increase was “insufficient” as it fell below the region’s inflation rate, according to Nikkei. 

In response, the Indonesian Employers’ Association has said that it was considering a lawsuit to block the governor’s proposition of a larger increase. 

The minimum wage in Indonesia’s capital city has risen by about 8% a year since the onslaught of the pandemic in 2020. 

READ: Jakarta increases provincial minimum wage for 2022

Under Indonesia’s Omnibus Law, passed in November 2020, each Indonesian province determines its own minimum wage based on the region’s economic growth rate, inflation, and other indicators. 

The move is part of a push by President Joko Widodo to attract more foreign companies to the country and award more flexibility to employers.