Minimum wage hike of 6.51 TP3T puts huge burden on Indonesia's business community

Economic policy analysts from the Indonesian Employers' Association assessed that a minimum wage increase of 6.5% would place a huge burden on the business community, especially labor-intensive industries, and that labor-intensive industries are becoming a priority for the government to reduce unemployment.The government wants to encourage a reduction in unemployment while placing an undue burden on the business community, who want it to provide a more middle-of-the-road policy. This policy is to ensure that minimum wage increases are sustained but take into account the productivity and competitiveness of national industries, following President Prabowo's announcement of an average minimum wage increase of 6.51 TP3T by 2025.

The decision to raise the minimum wage was also taken after President Prabowo met with labor representatives. President Prabowo explained that the minimum wage was a social safety net for workers with less than 12 months of work and that the determination of the minimum wage would take into account the need for a decent living. The Coordinating Minister for Economic Affairs said that the government would set up a working group on layoffs, and when asked about concerns about widespread layoffs as a result of the rise in the national minimum wage, he said that the working group would focus on examining fundamental aspects of Indonesian industry.