Indonesia releases economic package, new wage system

October 20, 201511:00 am451 views

THE INDONESIAN government has released its fourth economic package, focusing on helping the workforce survive layoffs through entrepreneurship as well as simplifying the annual wage formula to create better business certainty.

Coordinating Economic Minister Darmin Nasution said that under the new policy, the government would expand loans for small businesses.

“The main goal of this policy is to [create] more jobs. In line with that, we may help laid-off employees open their own business,” he said, as quoted by

The government will also assist the operations of export-oriented small and medium-sized enterprises, in a bid to prevent massive layoffs and to support national exports and productivity amid the harsh business situation.

As for businesspeople, the package provides them with a simplified formula for deciding annual wages, by counting inflation and economic growth figures only.

Thus, the government hopes, potential investors will be less hesitant about starting businesses, which means creating more jobs.

“The state plays its part in providing a safety net through this formula, to assure that the employee will not [suffer from] low wages, while at the same time businesspeople have the [confidence] to start their businesses … We must consider the unemployed as well,” Darmin said.

Under the new policy, he said, the minimum wage would be decided based on the existing wage plus inflation and economic growth figures.

For example, assuming that the 2015 inflation rate and economic growth were both 5 per cent, the 2016 minimum wage would rise by 10 per cent.

This new policy will be applied in calculating the 2016 minimum wage.

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