New Regulation on Decent Living Standards

The Minister of Employment(“Minister”)has issued Regulation No. 21 of 2016 on Decent Living Standards(“2016 Regulation”). The 2016 Regulation redefines several provisions on decent living standards which are to be used as a basis for calculations of the minimum wage threshold for workers.Prior to the 2016 Regulation, this matter was addressed in Minister of Employment and Transmigration Regulation No. 13 of 2012 on the Components and Implementation of Decent Living Needs(“2012 Regulation”)The 2016 Regulation is of relevance to all Indonesian employers and workersDecent Living Standards for the Determination of the Minimum WageDecent Living Standards (Kebutuhan Hidup Layak–“KHL”) reflect the standard living needs of single employees over the course of a single month. [1] The 2016 Regulation states that the KHL will be used as a component in order to determine the minimum wage. The minimum wage itself is to be determined by taking into account: the current minimum wage; the inflation level; and the current gross domestic product. The formula to be used for such calculations is as follows: [2]