The Minimum Wage Debate in Decentralized Indonesia: The Power of Unions and Local Government
This report discusses the political economy of minimum wage setting that has developed in Indonesia and seeks to examine the changing role of workers, employers, and local governments.
This report was featured as a chapter in “GLOBAL WAGE DEBATES: POLITICS OR ECONOMICS?” a joint report co-authored by the global partners of JustJobs Network.
This report discusses the political economy of minimum wage setting that has developed in Indonesia and seeks to examine the changing role of workers, employers, and local governments. First, the report explains the differences between New Order-era minimum wage setting and the regulations of the current Reformation Era. It then explains how these reforms, along with the newfound freedom of association, have transformed the political economy of the minimum wage-setting process. The next section explores empirically how much minimum wages have actually increased. After a brief discussion of enforcement and compliance, the report concludes with policy recommendations toward improving Indonesia’s wage-setting mechanisms.
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