10 Nov 2020
Jakarta Ups Minimum Wage, Ignoring Central Gov’t Call for Freeze
Despite a recent circular issued by the Ministry of Manpower calling on provincial governors to freeze the 2021 minimum wage rates in their respective jurisdictions, the Jakarta provincial administration has opted to increase the minimum monthly wage payable in the province during 2021 by 3.27 percent to IDR 4,416,186.548 (USD 307.40).
The administration’s decision is set out in Jakarta Gubernatorial Regulation No. 103 of 2020, which was promulgated on Oct. 30, prior to the coming into force of the Job Creation Law (or Omnibus Law as it is familiarly known).
Besides containing the standard clause that affords exemptions for businesses that are financially unable to pay the minimum wage (“Standard Exemption”), Reg. 103 provides an additional procedure under which businesses may seek exemptions from the minimum wage requirement should they be unable to pay as a result of the disruption caused by Covid-19 (“Covid-19 Exemption”). This Covid-19 Exemption is significant for a number of reasons:
While we do not as yet know what the criteria and requirements for the granting of Covid-19 Exemptions will be (they are to be set out in a directive issued by the Head of the Provincial Manpower, Transmigration and Energy Agency / Kepala DInas Tenaga Kerja, Transmigrasi dan Energi), it appears that they may be applied on a sectoral basis rather than an individual-enterprise basis. For example, there have been hints from the administration that businesses in the retail and mall, hospitality, tourism, property, trade, and food and beverage sectors, among others, will be eligible to benefit. It has also been reported in the media that some 80 exemptions were issued for businesses in the hospitality industry even though the directive had yet to be issued. Thus, it looks likely that it will be significantly easier to avail of the Covid-19 Exemption than the Standard Exemption.
While the Jakarta administration has ignored the central government’s calls for a minimum wage freeze, it has also accepted inescapable economic reality by establishing the Covid-19 Exemption mechanism for hard-pressed employers.
Given the devastating impact that Covid-19 has had on so many businesses across so many sectors, there is sure to be a flood of Covid-19 Exemption applications over the next few weeks. The big question is, does the Jakarta administration have the resources required to expeditiously process them or is this something that is going to drag on for months? If it does, things could get increasingly messy. However, if the reported granting of exemptions to some 80 businesses in the hospitality sector (ahead of the issuance of official criteria) is anything to go by, the application process may be little more than a formality.
Should you have any queries on the above or require legal advice as to how you can best protect your interests during this time of uncertainty, please contact the persons below, call us on +6221-2505125 or email us at firstname.lastname@example.org.
Mr. Emir Nurmansyah (email@example.com)
Mr. Nafis Adwani (firstname.lastname@example.org)
Mr. Agus Ahadi Deradjat (email@example.com)
 Per 6 November 2020
 Peraturan Gubernur Daerah Khusus Ibukota Jakarta No. 103 Tahun 2020 Tentang Upah Minimum Provinsi Tahun 2021
 Detailed procedures for the application of the Standard Exemption mechanism are set out in Minister of Manpower and Transmigration Decree No. KEP.231/MEN/2003 on Procedures for Deferral of Minimum Wage Payment / Keputusan Menteri Tenaga Kerja dan Transmigrasi Republik Indonesia Nomor : Kep.231/Men/2003 Tentang Tata Cara Penangguhan Pelaksanaan Upah Minimum)
 Constitutional Court Decision No. 72/PUU-XIII/2015 (Putusan Mahkamah Konstitusi Nomor 72/PUU-XIII/2015)
 For example, see Antara article “Disnakertrans-E DKI setuju usulan 80 hotel terkait UMP tanpa kajian” at https://www.antaranews.com/berita/1823408/disnakertrans-e-dki-setuju-usulan-80-hotel-terkait-ump-tanpa-kajian
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