Jakarta. The Indonesian Employers Association (Apindo) is seeking further clarification from the government behind the 6.5 percent increase in the Provincial Minimum Wage (UMP) announced by President Prabowo Subianto on Friday.

Apindo Chairperson Shinta W. Kamdani said that she needed a detailed explanation of the factors considered in determining the wage hike. Shinta stressed that understanding the methodology is crucial to ensure the wage increase balances both worker welfare and business sustainability.

"Until now, there has been no detailed explanation regarding the methodology used, especially whether variables such as labor productivity, business competitiveness, and current economic conditions have been considered," Shinta said on Saturday.

According to Apindo, the 6.5 percent UMP hike could significantly impact operational costs, particularly in labor-intensive sectors. Shinta pointed out that in light of ongoing global economic challenges and domestic pressures, the wage rise could increase production costs and reduce the competitiveness of Indonesian products in both local and international markets.

Furthermore, Apindo expressed concerns that the wage hike could lead to potential layoffs and hinder the creation of new jobs, adding to the challenges businesses already face.

Meanwhile, Manpower Minister Yassierli announced that regional governments must finalize the UMP by December 25, 2024. The Ministry is working on a timeline to ensure the timely implementation of the UMP and other wage policies, including sectoral minimum wages. Yassierli called for collaboration between the central and local governments to support the 6.5 percent increase.

Yassierli also urged both workers and employers to accept the government's decision to raise the UMP, stressing that it is part of a broader effort to improve national welfare. 

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