Evaluation of the Minimum Wage Policy (UMP) of DKI Jakarta Province in 2022

Abstract

The implementation of a minimum wage policy has the potential to alleviate wage inequality in various regions by increasing the wages of low-income workers and promoting more equitable income distribution. However, setting the minimum wage requires careful consideration to avoid setting it too low, which would result in workers struggling to meet basic living standards, or too high, which could lead to job loss. In 2021, a wage problem emerged in the DKI Jakarta Province when the proposed increase in the UMP for 2022 was only 0.85%, which was lower than the inflation rate of 1.14%. This discrepancy runs counter to the wage theory, which suggests that wages should increase alongside living standards. Consequently, the Governor of DKI Jakarta Province revised the UMP policy for 2022. This study aims to evaluate the determination of the 2022 DKI Jakarta Provincial UMP policy. The method used in this research is qualitative. The findings reveal that the revision of the UMP policy in 2022 created uncertainty, as an entrepreneur filed a lawsuit that is still pending, even though the UMP for 2023 has been decided. Therefore, this research underscores the importance of a well-formulated policy to ensure that the minimum wage policy achieves its intended goals.