Global Business Guide Indonesia

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Business Guide | Minimum Wages in Indonesia

Minimum wages in Indonesia differ from province to province. The provincial government annually issues a minimum wage that is applicable in the province. Government Regulation No. 78 of 2015 on Wages sets out a new strategy to calculate minimum wages for each province each year; this has been effective in formulating a more reliable annual calculation of minimum wage as of 2016. Furthermore, this new strategy takes into account yearly inflation rates and economic growth in calculating minimum wage.

Calculation of Minimum Wages in Indonesia

The calculation of the minimum wage in Indonesia is based on time and target. Wages that are based on time are set out daily, weekly, or monthly basis, whereas wages based on targets are set in accordance to the work set by the employer.

Weekly or monthly wages are based on 40 hours of work per week. As regulated under Labour Law No. 13 of 2003, 40 hours per week can be implemented in the following ways:

  • 7 hours a day and 40 hours for 6 working days, or;
  • 8 hours a day and 40 hours for 5 working days.

Daily wages are calculated in the following ways:

  • 6 working days a week, a month’s wage divided by 25, or;
  • 5 working days a week, a month’s wage divided by 21.

Moreover, minimum wage components consist of food and beverage, clothing, education, healthcare, transportation, recreations, and savings.

Minimum wage upratings are calculated by the following formula:

New minimum wage = Current minimum wage + (Current minimum wage x (Inflation + % GDP annual increase during the year)).

For more information about minimum wages in Indonesia or finding a local partner in Indonesia, contact GBG Indonesia.

Global Business Guide Indonesia - 2017

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)