Minimum Wages in Indonesia: Informality, Politics and Weak Trade Unions

Abstract

This chapter offers an introduction of Indonesia's post-1945 economic development and labour relations, and examines the country´s main labour market features: formalisation, informality, and inequality. Various measures indicate the stagnation on Indonesia's road to more income equality. The country’s many statutory minimum wages formally cover all employees except domestic workers. The Widodo administration aimed to “depoliticise” wage-setting through the 2015 minimum wage fixing reform. The relationship between minimum-wage setting and collective bargaining turns out to be of major importance. Successive administrations would have liked to turn minimum wages into a genuine wage floor, but dominant forces in these administrations have been reluctant to leave wage-setting to free collective bargaining. The chapter considers the prospects for steps towards more free and effective collective bargaining.

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Citation

• Van Klaveren, M. (2021). Minimum wages in Indonesia: Informality, politics and weak trade unions in a large middle-income country. In I. Dingeldey, D. Grimshaw, & T. Schulten (Eds.), Minimum wage regimes: Statutory regulation, collective bargaining and adequate levels (pp. 191–205). Routledge.