04 January 2011

A New Year & A New Minimum Wage for Jakarta...

Every year the minimum wage for Jakarta is increased. This is done through the issue of a gubernatorial regulation. The most recent of those was issued in November of 2010. The regulation, No. 196 of 2010, came into immediate force on 15 November 2010. However, the reality is that it came into effect on 1 January 2011.

The new minimum wage for Jakarta is IDR 1.29 million per month. In Australian dollar terms, having had a look at the exchange rate at the hole in the wall money changer yesterday, it is give or take AUD 100 per month. Admittedly, it is cheaper to "live" in some parts of Jakarta than others. It is also, perhaps, cheaper to live in Jakarta than, say, Sydney (or Australia, generally). Therefore, the best way to look at the minimum wage is whether it is considered sufficient to cover the basic living costs of Jakartans where they live, Jakarta.

The data that exists says that the minimum basic wage required to sufficiently cover one's costs in Jakarta is slightly above IDR 1.4 million per month. So, despite an increase of 15%+ over the 2010 minimum wage of IDR 1.18 million per month, the 2011 minimum wage still falls short,a nd considerably so, of what is needed to live at an acceptable level of comfort.

Nevertheless, it is important to remember that the minimum wage provisions only apply to those with less than one year of permanent employment. Those with more than one year of permanent employment are expected to be earning more than the minimum wage. It must be remembered that unemployment is still high in Indonesia, and especially in Jakarta as rural Indonesians migrate to the capital in search of permanent employment. For those who do not have permanent employment or whose employment can be best described as occasional then the minimum wage provisions contained in the regulation appear like a mirage in the distance that one will never meet.

Looking at the regulation in isolation hides the fact that it is still estimated that at least 50% of the population exist on less than USD 2 per day.

If you want "proper" analysis of the regulation and a copy if it, then head over to Hukumonline (that's where I go to get copies of legislation, the analysis I do myself :D).

1 comment:

camobel said...

Quite useful information, much thanks for this post.