Under Indonesia’s Labor Law No. 6/2023 and Government Regulation No. 36/2021, workers with less than one year of seniority at their current employer are entitled to the minimum wage, while those with one year or more of seniority must have their wages guided by a structured wage scale. This framework ensures that the legal minimum wage serves as a baseline.
However, some employers in Indonesia have demonstrated resistance to compliance. This was demonstrated by the recent legal challenge by the Indonesian Employer Association (APINDO), which attempted to have the requirement revoked. This lawsuit was ultimately dismissed by the Supreme Court.
Other contributing factors to the lack of implementation of appropriate wage structures include low employer awareness regarding legal obligations and the absence of effective worker low employer awareness regarding legal obligations and the absence of effective worker adjustments for senior workers that do not align with legal requirements.
Companies should ensure their suppliers in Indonesia have a defined wage structure and scale that complies with both legal requirements and FLA standards.