The Influence of Regional Minimum Wage Discretion on Wage Disparity and Company Relocation

DOI

10.2991/iccd-19.2019.28How to use a DOI?

Keywords

Wage discretion, disparity, economy growth, relocation

Abstract

Wage disparity has been more apparent since 2015, causing anxiety among employees and employers. Therefore, a strategic policy in wage governance is required as the solution to address the issue. The current wage discretion policy was made by the governor through the Decree of the Governor of East Java number 188/665/KPTS/013 2018 regarding the minimum wage for the districts and cities in East Java province. Twenty-two regions of the regencies and cities received 11-24,57% of wage increment while the other sixteen regions, which have a relatively higher standard of minimum wages, received 8,03% wage increment in accordance with the Government Regulation year 2015 number 78. The purpose of this research is to analyze the influence of wage discretion in solving the wage disparity problem and company relocation. The subjects of this research were labor union, Indonesian business association (APINDO), and government based on purposive random sampling method. The data analysis method used is a descriptive-qualitative method, including interviews with the research subjects, triangulation, international journals, documents, and articles. The finding of the research shows that the minimum wage discretion policy influences 1) Decrease in wage disparity; 2) Increase in companies relocating to areas with lower minimum wage, and 3) Decrease in labor demand. Therefore, the minimum wage discretion policy should consider the following aspects, such as regional condition, decent living needs, company types, national economic growth, and inflation rates.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Bachrul Amiq
AU  - Liosten Rianna Roosida Ully Tampubolon
AU  - Edy Widayat
PY  - 2019/10
DA  - 2019/10
TI  - The Influence of Regional Minimum Wage Discretion on Wage Disparity and Company Relocation
BT  - Proceedings of the 6th International Conference on Community Development (ICCD 2019)
PB  - Atlantis Press
SP  - 100
EP  - 102
SN  - 2352-5398
UR  - https://doi.org/10.2991/iccd-19.2019.28
DO  - 10.2991/iccd-19.2019.28
ID  - Amiq2019/10
ER  -