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Deputy Chairperson of the Indonesian Chamber of Commerce and Industry for Regional Autonomy Development, Sarman Simanjorang, responded to the government's decision regarding the 2023 provincial minimum wage (UMP) increasing by a maximum of 10 percent through Minister of Manpower Regulation (Permenaker) No 18 of 2022. Sarman admitted that business actors were surprised by this policy. He said that his party would continue to comply with regulations regarding wage arrangements according to Government Regulation No. 36 of 2021, which is a derivative regulation of the Job Creation Law (Ciptaker).

"We really feel very, very unexpected that there is a new regulation issued by the Minister of Manpower, so for us business actors this is something that there is no legal certainty," he said, Tuesday (11/22).

He said, if there is a change regarding the wage formula, the government should carry out tripartite negotiations between employers, trade unions and the government. Or it could also be brewed through the Wage Council.

Sarman asked the government to re-evaluate and take policies that are not one-sided so that both employers and workers are satisfied.

"We really hope that the government will negotiate again with representatives of employers and workers to formulate an appropriate formula, but with a note that it must comply with applicable regulations and regulations," he said.

Changes to the UMP Formula Are Considered to be a Threat to the Investment Climate

Sarman also said that changes to the UMP formula quickly took about 1.5 years from the publication of PP No. 36 of 2021, and without any negotiation process, might threaten the national business and investment climate.

"I think this is not conducive because for us we need legal and business certainty which will have an impact on a conducive business and investment climate," he said.

According to Sarman, wage matters should be viewed from various interests, not only from the workers' side. He assessed that businessmen would be burdened by this policy.

A number of workers sat blocking Jalan Medan Merdeka Selatan during a demonstration in front of the DKI Jakarta City Hall, Jakarta, Wednesday (21/9).

This is because the current weakening global economic conditions have reduced demand for domestic industries, especially labor-intensive industries such as textiles, garments, footwear, and so on.

This condition, he said, had resulted in many layoffs (PHK) in rich-intensive industries, even though Indonesia's economic growth was still recorded at a positive 5.7 percent in the third quarter of 2022.

"Because labor-intensive industries still depend a lot on foreign orders, when foreign countries were affected by the global crisis, the Russian and Ukrainian wars, our labor-intensive industries immediately felt a shortage of orders and had to reduce their workforce," he explained.

Sarman continued, many world economic institutions have predicted the potential for a global economic crisis to occur in 2023, so that it will directly or indirectly impact domestic business actors.

"Setting the UMP must also take into account the real economic conditions of the employers, so that there is a balance in setting the policy, which means that it is not solely the interests of the workers but there are the interests of the employers," he said.