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fter some inconsistencies, the government made it clear on Thursday that it will not cap minimum wage increase in the presidential instruction that will serve as a reference for local administrations.

Industry Ministry MS Hidayat said even though there is no limitation, the government will ensure the wage increase next year will be no higher than 20 percent.

In the presidential instruction draft, the minimum wage will be based on the basic cost of living (KHL) and economic growth, plus an additional element '€” the labor productivity.

'€œIdeally, the wage increase should be followed by a boost in productivity. To measure this, we will engage the Central Statistics Agency [BPS] to carry out a survey,'€ Hidayat said during a hearing at the House of Representatives on Wednesday evening.

Regarding some local administrations that have increased labor wages to a level higher than the KHL, Hidayat said the government will set a bipartite talk with employers and employees to discuss the matter.

'€œThere will be different wage increases in labor-intensive and non labor-intensive industries in regions with wages lower than the KHL,'€ he said.

Meanwhile, Indonesian Employers'€™ Association (Apindo) chairman Sofjan Wanandi agreed with the no-cap idea, saying there should be no cap on minimum wage increase as '€œeconomic conditions change over time'€.

Sofjan also called on everyone not to react to this issue considering that it is '€œstill a presidential instruction draft'€. People need to wait and see if the presidential instruction will be signed or not.

'€œThe President can sign it anytime, days, months or years. So please be patient,'€ he said by phone.

Contacted separately, Mudhofir from KSBSI also asked all groups to refrain from making provocative statements, saying the presidential instruction has not even been finalized.

'€œIt is best to wait and see whether the instruction will be signed by the President,'€ he said.

He reiterated his unions'€™ stance that the only procedure allowed under Indonesia law to set the minimum wage is through a mechanism mandated by Law no 13. of 2013 on manpower, which stipulates that wages are set by a regional wage council.

'€œIf the minimum wage is set by any other institution, we will reject it'€ said Mudhofir.

Under the Manpower Law, wages are set by regional wage councils through a tripartite mechanism that involves the government, the employers and the laborers. Each party needs to survey and assess a reasonable minimum wage for laborers with the hope to make a consensus.

'€œThe government must not break the law. We are certainly open for dialogue to discuss solutions,'€ he added.

Earlier reported, Manpower Minister Muhaimin Iskandar had retracted his claim that President Susilo Bambang Yudhoyono had signed a presidential instruction that will cap the increase on minimum wages for labor intensive industries, saying that the process was halted due to '€œsome resistance'€.

Manpower and Transmigration Minister Muhaimin Iskandar, admitted on Wednesday that the government needed time '€œto raise mutual understanding'€ that labor-intensive corporations needed '€œspecial treatment'€ when it comes to the minimum wage structure. (asw)