Manpower Minister Allows Exporters to Cut Workers' Wage by up to 25%

TEMPO.CO, Jakarta - Manpower Minister Ida Fauziyah allowed companies in export-oriented, labor-intensive industries affected by the economic slowdown to cut their workers' salaries by up to 25 percent.

This is regulated in the Manpower Minister’s Regulation (Permenaker) No. 5 of 2023 concerning the adjustment of working time and wages in certain export-oriented labor-intensive industrial companies affected by changes in the global economy. This rule was promulgated and took effect on March 8, 2023.

The issue of wage adjustment is stipulated in the third part of the Permenaker entitled Wage Adjustment, specifically in Article 7. In this article, it is noted that the government has established a wage adjustment policy for certain export-oriented labor-intensive industries that are affected by changes in the global economy.

“By considering national economic conditions and to maintain continuity of work and business continuity,” as read in Permenaker No. 5 of 2023.

However, Article 3 (1) outlines the criteria for export-oriented labor-intensive industrial companies that are permitted to cut wages. First, the industry has a minimum of 200 workers. Secondly, the percentage of labor costs in production costs is at least 15 percent. Thirdly, production depends on requests for orders from the United States and European countries must be proven by letters of request for orders.

Article 3 (2) of the Manpower Minister’s Regulation also stipulates the definition of certain export-oriented labor-intensive industrial companies. They must fall into 5 categories of the industry, namely the textile and apparel industry, the footwear industry, the leather and leather goods industry, the furniture industry, and the children's toy industry.

RR ARIYANI 

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