Wage Increase Should Be More Proportional

If the 2023 minimum wage is still based on the formula stated in Government Regulation No. 36 of 2021, an increase in inflation will continue to erode the buying power of the workers.

KOMPAS/RADITYA HELABUMI

Women workers from various trade unions take part in a demonstration in front of the DPR/MPR Building, Jakarta, Wednesday (15/6/2022).

JAKARTA, KOMPAS — The upward trend in inflation will further erode the people's buying power, given the small increase in the minimum wage. In order to maintain the people’s buying power, the minimum-wage policy, which will be discussed again in the near future, should ensure more proportional increases in line with the inflationary rate.

During the first half of this year, the annual inflation rate had increased from 1.87 percent in December 2021 to 4.35 percent in June 2022. Although it is still relatively small compared to the inflation rates in other countries, the increase in prices of various basic needs has eroded the buying power of the people, especially those who live on fixed incomes. This is because the average increase in the national minimum wage in 2022 has only been 1.09 percent, below the inflation that continues to increase and is predicted to amount to 5 percent by the end of this year.