Using the Government’s New Formula, the 2024 UMP Will Only Increase by Under 5% News – 59 minutes ago

Jakarta, CNBC Indonesia – The government has issued Government Regulation (PP) Number 51 of 2023 concerning Wages as a replacement for PP Number 36 of 2021. This regulation also includes a new calculation formula for the Minimum Wage.

In article 26 of PP Number 51 of 2023, the Minimum Wage calculation formula includes 3 variables, namely Inflation, Economic Growth and Certain Indexes (symbolized in the form α). Certain indices are in the value range of 0.10 to 0.30.

The formula for calculating the minimum wage is as follows:


UMP = inflation + (economic growth X certain index/α)

Referring to the latest data, inflation in October 2023 was 2.56% and Indonesia’s economic growth in the third quarter of 2023 was 4.94%. While the index used is 0.1 or 0.3, the 2024 UMP is:

A demonstration of hundreds of workers demanding that the 2024 UMP increase by 15% in the Horse Statue area, Jakarta.  (CNBC Indonesia/Rosseno Aji Nugroho)Photo: Demonstration of hundreds of workers demanding that the 2024 UMP increase by 15% in the Horse Statue area, Jakarta. (CNBC Indonesia/Rosseno Aji Nugroho)
A demonstration of hundreds of workers demanding that the 2024 UMP increase by 15% in the Horse Statue area, Jakarta. (CNBC Indonesia/Rosseno Aji Nugroho)

2.56% + (4.94 X 0.1) = 3.054% or 2.56% + (4.94 X 0.3) = 4.042

President of the Association of Indonesian Trade Unions (ASPEK Indonesia) Mirah Sumirat assesses that the increase in labor wages in 2024 will not be more than 5% if the new formula is used. Mirah said the small increase in the 2024 UMP was due to certain index variables.

“So the UMP is below 5%, so the value index limits workers’ wages. So it is certain that the figure that will be issued will be below 5% or 7%. In fact, this coefficient index is confusing,” he said to CNBC Indonesia, Tuesday (14/11/2023 ).

In fact, Mirah said the workers proposed a 15% increase in the 2024 UMP to the government. He emphasized that this proposal was a compromise figure, which should be up to 25%.

“The 15% figure is a compromise figure, the realistic figure is 25%,” he stressed.

[Gambas:Video CNBC]

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(wur/wur)