APINDO: Increase in Jakarta?s UMP for the 2017 Period Already Ideal

Indonesian Version

  
Marcell Sihombing, Ady T.D. Achmad

  

The Governor of the Special Capital-City Region of Jakarta (Governor) has recently determined the 2017 provincial minimum wage (Upah Minimum Provinsi - UMP) for Jakarta to be IDR 3,355,750 per month. This new minimum wage will become effective from 1 January 2017, as stipulated under Governor’s Regulation No. 227 of 2016 (Regulation 227/2016) on the 2017 UMP, which was issued on 27 October 2016 and which entered into force on 31 October 2016.
 
In order to immediately implement Regulation 227/2016, Priyono, the Head of Jakarta’s Provincial Employment Service Office (Dinas Tenaga Kerja Provinsi), has already instructed Jakarta’s employment department (suku dinas tenaga kerja) to disseminate relevant information on the 2017 UMP to all of the companies currently under its administration.
 
Companies may, however, submit an application to postpone the implementation of Regulation 227/2016 within their company if they are unable to meet their obligations under the regulation by filing an application with the Governor no later than 10 days before the 2017 UMP comes into force on 1 January 2017 (i.e. by 22 December 2016 at the latest). Any such company that applies for a postponement must also meet all of the necessary requirements and enclose the documents which are stipulated under the prevailing laws and regulations, such as Government Regulation No. 78 of 2015 on Wages [Regulation 78/2015] and Governor’s Regulation No. 42 of 2007 on Procedures for the Postponement of UMP Implementation [Regulation 42/2007].
 
Examples of the documents which must be enclosed alongside any postponement application include a company’s financial reports for the last two years, as well as an agreement which has been drawn up between the employer in question and their workers. Moreover, in accordance with the Constitutional Court Decision on UMP postponement, the deadline for the payment of any UMP wage discrepancies must also be agreed upon in advance.
 
“We [the Employment Service Office] will thoroughly examine any postponement applications by assessing all of the required administrative documents, as well as undertaking field inspections of any companies which file such applications,” Mr. Priyono asserted in Jakarta on Friday, 4 November 2016.
 
Mr. Priyono went on to assert that these field inspections would be jointly carried out by the Employment Service Office, as well as by members of the Regional Wage Council (Dewan Pengupahan Daerah) who are representing the interests of both employers and employees. Mr. Priyono also revealed that during the 2016 period, no company had managed to successfully meet the relevant criteria for UMP postponement applications, and thus no postponement had so far been approved this year.
 
Also commenting on this matter, Sarman Simanjorang, a member of Jakarta’s Regional Wage Council responsible for representing companies, asserted that the new UMP level of IDR 3,355,750 was already ideal. Mr. Simanjorang believes that the above figure already satisfies the provisions set out under Regulation 78/2015, which basically seeks to offer legal certainties to employees that the UMP will be routinely increased every year.
 
In addition, Mr. Simanjorang also stated his belief that the new UMP was also in line with the Ministry of Employment Circular Letter (Circular), which sets a national inflation rate of 3.07%, as well as a national economic growth rate of 5.18%. In this regard, Mr. Simanjorang stated that companies had been hoping for a UMP increase that took into account factors relating to business capabilities, economic growth and the national inflation rate. In other words, any increase in economic growth and development in Indonesia should ultimately lead to a greater UMP increase.
 
Based on these considerations, Mr. Simanjorang is convinced that the new UMP offers certainty for both workers and employers. Mr. Simanjorang, who also serves as the Head of APINDO Jakarta, also expressed his intention to immediately disseminate relevant information on the new UMP to all companies which are domiciled in Jakarta. Moreover, Mr. Simanjorang is also encouraging all capable companies to comply with the new UMP, while reminding them that any companies which are currently incapable of paying the minimum wage may apply for postponements, so long as they enclose all of the necessary documents and meet all of the mandated requirements.
 
“Generally speaking, we [APINDO] suggest that all companies domiciled in Jakarta refrain from postponing the implementation of the new UMP,” asserted Mr. Simanjorang.
 
Timboel Siregar, the Secretary General of the Indonesian Employee’s Organization (OPSI) also ventured an opinion on the issue of the new UMP. Mr. Siregar asserted that most governors had already determined the 2017 UMP increase to be 8.25%, in accordance with Regulation 78/2015 and the Circular. Nonetheless, any employees who are intending to challenge the new UMP may file lawsuits at the State Administrative Court (PTUN).
 
Mr. Siregar went on to emphasize that both the government and APINDO should be consistent in their implementation of Jakarta’s UMP for 2017, as the new minimum wage had been determined according to carefully formulated suggestions which had been made by both the government and APINDO. Mr. Siregar also sought to remind employers that any employees who have been working for less than a year are still guaranteed the full 2017 UMP.
 
“The Employment Law prohibits companies from paying any salaries which are lower than the minimum wage and any companies caught violating this provision will be subject to criminal sanctions,” Mr. Siregar stated firmly.
 
Since the Ministry of Employment has issued an official Circular in order to ensure that all UMPs determined by governors comply with Regulation 78/2015, Mr. Siregar asserted that there should also be a circular letter which aims to ensure that all employment officials working at both the central and regional levels and who are responsible for overseeing the effective implementation of UMP will be firm in their imposition of sanctions upon any offending employers.
 
“Such officials must be encouraged to implement the provisions which are set out under Article 185 of the Employment Law and apply them to any companies which are found to be in violation. The Ministry of Domestic Affairs must also have the courage to reprimand and impose sanctions upon any governors who are caught paying workers less than the applicable UMP for their jurisdictions,” Mr. Siregar suggested.
 
Similarly, Mr. Siregar is also urging APINDO to have the courage to reprimand any of its members who are caught disregarding the UMP and to impose sanctions upon any such offending companies. Mr. Siregar concluded by firmly asserting that both the government and APINDO must enforce the new minimum-wage provisions consistently.
 
(cd/sp)