Provincial Minimum Wage (UMP) is one of the wage policy instruments designed to protect workers in Indonesia, especially workers with basic skills who work at the lowest level. UMP is important in ensuring worker welfare and supporting people's purchasing power, which indirectly affects social stability and economic growth. However, this policy also raises challenges in its implementation, both in terms of employer compliance and its impact on the business sector, especially small and medium enterprises.
Since its introduction, the UMP has continued to undergo transformation in its formula and determination mechanism. The latest reform through Government Regulation No. 36 of 2021 concerning Wages, part of the implementation of the Job Creation Law, aims to align the minimum wage with regional economic conditions. However, this policy has drawn pros and cons from various parties, including workers, employers, and economic observers. This labor brief will discuss in general the legal basis, determination process, overview, and challenges of the UMP in Indonesia.
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