The Minister of Manpower issued Circular Letter No. B-M/383/H1.01.00/XI/2021 dated November 9, 2021 on Submission of Economic and Employment Data in Determining the Minimum Wages in 2022  as a mandate under Government Regulation No. 36 of 2021 dated February 2, 2021 on Wages ("GR 36/2021").  The circular letter summarizes data provided by the Head of Central Bureau of Statistics (Badan Pusat Statistik, or "BPS") on economic and labor conditions used in determining the 2022 minimum wages.

Provincial, and regency/city minimum wages are set based on economic and employment conditions which shall be adjusted every year. Governors are required to dete-rmine the Provincial Minimum Wages (UMP) no later than November 21, and may determine the Regency/City Minimum Wages (UMK) with certain conditions no later than November 30 every year. The UMK is determined after the UMP is determined, and the UMK should be greater than the UMP. The UMP and UMK determined by governors on November 21 and 30, 2021 shall become applicable on January 1, 2022.

The UMP is stipulated based on the median of the upper limit and lower limit of the minimum wage of the respective areas, with the formula stated under GR 36/2021 (the "Adjustment Formula").  Regencies or cities which have preexisting UMK (i.e., the 2021 UMK) shall make a minimum wage adjustment with the Adjustment Formula.  For regencies or cities which do not have a determined UMK yet, shall have separate calculation stages set further under GR 36/2021.

Employers are required to develop and implement the structure and scale of wages, so that the wages for employees with 1 (one) year or more working periods are stipulated based on such structure and scale of wages.

Micro and small business are exempted from the provisions on minimum wages as it is determined based on agreement between the employers and the employees provided that; it is at least 50% of the average consumption of the citizens in the provincial level, and the agreed wage is at least 25% above the poverty line at the provincial level.

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