Minimum wages are the lowest minimum wages that consist of basic wage and fixed allowances. Minimum wage rates differ across groups of workers, sectors of economic activity and by geographical location. Provincial and District Wage Councils provide suggestions to Provincial Governors in order to formulate regulations specifying the minimum wage. Organizations of employers and workers are represented on the councils.
MANPOWER ACT NO. 13 OF 2003, ARTS. 88, 89, 90(1) [UU KETENAGAKERJAAN NO. 13 TAHUN 2003, PASAL 88, 89, 90(1)];
GOVERNMENT REGULATION ON WAGES PROTECTION NO. 8 OF 1981 [PERATURAN PEMERINTAH TENTANG PERLINDUNGAN UPAH NO. 8 TAHUN 1981];
MOMT DECREE NO. KEP-226/MEN/2000 [KEPUTUSAN MENAKERTRANS NO. KEP-226/MEN/2000];
MOM REGULATION NO. PER-01/MEN/1999 [PERATURAN MENAKER NO. PER-01/MEN/1999].
5.1.1. Postponement of Minimum Wage
Employers who are not financially able to pay minimum wages can apply for approval for postponement from the Provincial Governor. The request must be based upon a written agreement between employers and workers or unions. One union or a coalition of unions representing more than 50% of the workers in the factory can negotiate on behalf of workers, and agree for the postponement to occur.
Employers must include with their request a financial report of the company for the previous two years, and production plans for the next two years.
The request for a postponement must be made at least 10 days before a new minimum wage rate is set to take effect.
The Governor can agree for a factory to continue to pay the previous year’s minimum wage rate for up to 12 months.
The Governor has one month to agree or refuse the request.
MANPOWER ACT NO. 13 OF 2003, ART. 90(2-3) [UU KETENAGAKERJAAN NO. 13 TAHUN 2003, PASAL 90(2-3)];
MOMT DECREE NO. KEP.231/MEN/2003 [KEPUTUSAN MENAKERTRANS NO. KEP.231/MEN/2003];
MOM REGULATION NO. PER-01/MEN/1999, ARTS. 20-23 [PERATURAN MENAKER NO. PER-01/MEN/1999, PASAL 20-23].
Apprentices are entitled to receive from their employers:
- Social security for workplace accidents (JAMSOSTEK)
- Pocket money and/or transport money
- A certificate of completion
Good Practice: Although there is no specific minimum wage established for apprentices, employers should pay apprentices a reasonable amount to cover transport and meals, to compensate them for the products or services they provide.
MANPOWER ACT NO. 13 OF 2003, ART. 22 [UU KETENAGAKERJAAN NO. 13 TAHUN 2003, PASAL 22];
MOMT REGULATION NO. PER.21/MEN/X/2005, ART. 11-12 [PERATURAN MENAKERTRANS NO. PER.21/MEN/X/2005, PASAL 11-12].
MOMT REGULATION NO. PER.22/MEN/IX/2009, ART. 15 [Permenakertrans No. 22_MEN_IX_ 2009 tentang Magang ]
5.1.3. Non-permanent Workers
Employers must pay the correct district minimum wage for ordinary hours of work to non-permanent workers, including those hired for a specified period of time, or to complete a certain job.
Only permanent work agreements may include a probationary period, which cannot exceed three months. Probationary workers must not receive less than the minimum wage.
5.1.5. Piece Rate
Workers who are paid based on piece rates must be paid at least minimum wage for ordinary hours work, even if their actual piece-rate earnings are below minimum wage. If their actual piece-rate earnings are higher than minimum wage, then they should be paid the higher amount.
Example: A factory in Semarang paid a worker IDR 200 per piece to trim thread ends on jeans. In February, she made a total of 4,000 pieces during regular working hours. Therefore, based on her piece rate pay, she earned IDR 800,000 for the month. Since the monthly minimum wage in Semarang is IDR 941,600, she should receive this higher amount, because she must be paid at least minimum wage. In March, she made a total of 5,000 pieces during regular working hours. Therefore, she should receive IDR 1,000,000 for that month, because her piece rate earnings exceeded minimum wage.