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COVID-19 takes severe toll on wages
Average wage in Indonesia dropped 1.75 percent yoy to Rp 2.86 million (US$201) in May, but personal incomes have begun to recover in recent months, in line with overall economic improvements.
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Workers hold a peaceful demonstration in Jakarta to mark Labor Day, on May 1, 2021. In addition to demanding the revocation of the Job Creation Law, they demanded that minimum wages be set by sector. (Antara/Akbar Nugroho Gumay)
T
he COVID-19 pandemic has led to a general decline in wages as businesses tightened their belts to survive the economic downturn caused by mobility restrictions.
Statistics Indonesia (BPS) reported in early May that average wage had dropped 1.75 percent year-on-year (yoy) to Rp 2.86 million (US$201), but it was up 3.78 percent compared to August 2020, which suggested rapid improvement as the economy begins to recover.
The average real wage recorded its steepest decline since at least 2016 last August, when it was down 7.18 yoy as the economy fell into its first recession in over two decades.
The unemployment rate increased to 6.26 percent this February from 4.94 percent a year earlier, underscoring the pandemic’s impact on the labor market.
Wages fall across all sectors
While average wages contracted across all sectors, the contraction was narrower in sectors that fared better in terms of growth.
The accommodation, food and beverage sector saw the sharpest decline, with real wages declining 18.7 percent yoy last August. This was in line with the sector contracting 11.81 percent in the third quarter of 2020, second only to the transportation and warehousing sector.
