ARTICLE · 12 DECEMBER 2023

New Regional Minimum Wage Framework

Herbert Smith Freehills Kramer LLP

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On 10 November 2023, the Government introduced a new regulation amending the regional minimum wage framework. This is anticipated to increase regional minimum wages that will apply from 2024.

IndonesiaEmployment and HR

Herbert Smith Freehills

On 10 November 2023, the Government introduced a new regulation amending the regional minimum wage framework. This is anticipated to increase regional minimum wages that will apply from 2024. The below update looks at these changes and what it means for employers.

Background

In Indonesia, minimum wages are set at the regional level (ie at the provincial or the city/regency level) rather than at the national level.

The regional minimum wage framework is regulated by Government Regulations No 36 2021 on Wages (GR 36) which requires minimum wages to be adjusted annually within a region-specific minimum wage band. This band is calculated considering the average household consumption per capita, rate of inflation and economic growth in that region.

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