Wage surge makes entrepreneurs flee, it’s the regional head’s fault! News – 48 minutes ago

Jakarta, CNBC Indonesia – The increase in the 2024 Provincial Minimum Wage (UMP) and Regency/City Minimum Wage (UMK) is the result of regional governments being unable to control the prices of goods and services needed by the community. High inflation must automatically be responded to with an increase in the UMP.

This was stated by former Minister of Finance Bambang Brodjonegoro to CNBC Indonesia, Friday (24/11/2023).

“Of course, the UMP is based on local regional conditions, meaning that there is a greater need for daily living in that area,” said Bambang.

He said that when local governments are able to keep prices stable, the increase in the UMP can also be reduced. Thus, there is no need for an increase in the UMP that is too large to cause entrepreneurs to move their production base.

“The regional government must make more efforts to maintain the level of daily needs in the area by ensuring that both production and distribution of daily goods can be maintained,” said Bambang.

The senior economist said that controlled regional inflation would create a balance between the increase in workers’ wages and the company’s ability to pay salaries. He said there had been examples of companies moving their factories because they objected to the relatively high UMP.

“The phenomenon that I have noticed is the movement of several companies or factories from around West Java, especially Jabodetabek, to Central Java, where the UMP is quite far below the Jabodetabek UMP, and especially quite far from the highest UMK (district minimum wage) in Karawang,” said he.

Previously, the majority of provinces in Indonesia had announced an increase in the UMP in 2024. North Maluku is still the province with the highest percentage increase, namely 7.5%. Other provinces where the increase was above 5% were DI Yogyakarta with a percentage increase of 7.27% and East Java 6.13%. Other provinces chose to increase the 2024 UMP by only around 1% to 5%.

DKI Jakarta is still the holder of the highest UMP with a value of IDR 5,067,381. Meanwhile, Central Java has the lowest UMP with a value of IDR 2,036,947.

[Gambas:Video CNBC]

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