Indonesia to review minimum wage rules after protests over fuel price hike

INDONESIA will review minimum wage and other labour rules, the president’s office said on Tuesday (Sep 13), after trade unions staged nationwide protests against a recent hike in petrol prices that they say has come even as incomes stagnate.

President Joko Widodo raised subsidised fuel prices in South-east Asia’s largest economy by 30 per cent earlier this month to rein in a spiralling energy subsidy budget, sparking protests by workers and students across the country.

The fuel price hike is set to accelerate inflation, which has already reached its highest since 2015 due to rising food prices.

On Monday, Heru Budi Hartono, chief of the president’s office, met workers protesting at the presidential palace in central Jakarta to discuss their demands, according to a palace statement.

Workers have called for a change in the formula used by the government to determine annual increases in minimum wage, and for changes in the controversial Job Creation law, Heru said in the statement, referring to controversial legislation passed in 2020 that unions said was too pro-business.

Authorities are set to review the workers’ demands on Tuesday, he added.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

Indonesia‘s inflation saw year-on-year figures of 1.68 per cent and 1.87 per cent in 2020 and 2021, respectively. But the consumer price index surged to 4.94 per cent in July due to global supply chain disruptions and surging commodity and energy prices.

With growth and inflation in 2021 still reeling from the Covid-19 pandemic, the minimum wage rose by an average of only 1.09 per cent in 2022 across the nation of 270 million people, local media reported.

Hermanto Ahmad, secretary-general of labour union KSPSI, was quoted in the palace statement as saying that the fuel price hike will have a knock-on effect on prices of other necessities. 

KSPI, another labour group that has been organising rallies, will continue protesting until the government reverses the fuel price hike, said its chairman Said Iqbal on Tuesday. REUTERS