Definition of UMR and List of UMR Salaries in 34 Provinces of Indonesia

Definition of UMR and List of UMR Salaries in 34 Provinces of Indonesia –¬†When we are already working in a company, of course getting a salary is something we really look forward to. The salary we receive every month is an amount that has been calculated by the company and is adjusted to the company’s own standards, our education level, and the cost of living.

For the value of the provincial minimum wage or UMP per 2022, the Minister of Manpower and Transmigration has set the latest UMP and has begun to implement it. The 2022 UMP is determined by each governor in each province in Indonesia. Before then the regional head, whether it was the mayor or the regent, set the district or city minimum wage or UMR (Regional Minimum Wage).

As workers, we should understand how much UMR we deserve. This is intended so that we can better understand our rights as workers and of course so that we can avoid unreasonable wages. Therefore, try to find out more about the UMR, the latest UMR value, and the important components in its calculation. For those of you who don’t know the meaning of UMR and the components in it, the following is a complete discussion.

Understanding UMR

Definition of UMR and List of UMR Salaries in 34 Provinces of Indonesia

UMR or Regional Minimum Wage is a standard used by companies or business owners as well as other industry players in setting wages or salaries for employees, laborers, employees who work in their business environment. With the implementation of salaries according to the UMR, it aims to protect the rights of workers to get a decent salary and in accordance with the workload they do.

If based on Permenaker No. 1 of 1999 concerning the Minimum Wage, the UMR is divided into two types, namely the level 1 UMR in the province and the level 2 UMR which is applied in the regency or city area. However, with the Decree of the Minister of Manpower and Transmigration No. 226 of 2000, the UMR level 1 has been changed to the UMP or Provincial Minimum Wage. Then the UMR at level 2 was changed to the Regency or City Minimum Wage or Minimum Wage.

The minimum wage is one of the lowest nominal salary standards that must be used as a benchmark for business owners or industry players in providing salaries for workers in their companies. The purpose of setting a minimum wage by the government is to create a payroll system that can meet the living needs of workers and their families.

The minimum wage itself does not apply singly to all regions in Indonesia. Each region has a different minimum wage standard. For example, the minimum wage in DKI Jakarta is higher than the minimum wage in Central Java, or the minimum wage in Karawang is greater than the minimum wage in Surabaya. That means that in each region the UMR or Regional Minimum Wage applies.

The UMR itself consists of a basic salary which includes a fixed allowance and is usually determined by the minister no later than 40 days prior to the effective date of the salary. Meanwhile, UMR is reviewed at least once every 2 years.

The level 1 minimum wage and level 2 minimum wage are determined based on the following considerations:

1. Workers’ needs
2. CPI or Consumer Price Index
3. Company capability and development
4. Wages or salaries in general that have been applied in certain areas and between regions
5. Labor market conditions
6. The level of economic development and income per capita

Still referring to Permenaker No. 1 of 1999, the determination of the level 1 minimum wage and level 2 minimum wage was carried out through a proposal process from the Commission for Research on Wages and Social Security of the Regional Manpower Council. In formulating the proposal, this commission can consult with employers’ organizations as well as trade unions in the regions.

The proposal submitted to the Minister of Manpower has obtained approval from the governor. If the governor refuses to provide a recommendation, the proposal will be returned to the commission for review and re-proposed later. Finally, the minister will determine the UMR after hearing suggestions and considerations from the National Wage Research Council. The UMR level 1 and UMR level 2 set by the minister may differ from the proposals given by the regions.

Understanding About UMR

The following are some things related to UMR that you need to understand:

1. UMR is not a basic salary

Usually, people will think that the UMR is the same as the base salary. But in fact, they are two different things. So, the UMR is a wage or salary that already contains the basic salary and other allowances that have been determined and agreed in advance. While the basic salary is the value of the main salary only. Salary or basic salary is a salary whose value is determined in accordance with the regulations and policies of the company. The basic wage also has a smaller amount compared to the UMR. Because, it does not include the value of allowances and others. Therefore, you must understand the difference between the two.

2. Determination of UMR

The determination of the UMR value will usually be determined based on calculations made by the Regional Wage Council or DPD. The council has a survey team whose job is to go out into the field to conduct a survey to find out the prices of some necessities needed by employees, laborers, and also employees. Surveys conducted in a number of cities or provinces are representative of data processing for Decent Living Needs or KHL for individuals who are not married or have families in each province. Then from the results of the KHL, the DPD will propose the provincial minimum wage or what we now know as the UMR. The proposal is then submitted to the governor for approval.

3. Components of UMR

The following are the components of the UMR based on the Circular Letter of the Minister of Manpower of the Republic of Indonesia No, SE-07/MEN/1990 of 1990 concerning the Grouping of Wage Components and Non-Wage Income, including:

a. Basic Wage

Wage or basic salary is a compensation that must be paid to workers according to the level or type of work whose amount is determined by mutual agreement.

b. Fixed allowances

This is a regular payment related to work that is given to workers on a regular basis and is paid in equal time units each month and is given along with the payment of the basic salary. Such as child allowance, housing allowance, wife allowance, death allowance, regional allowance, and others. Then the transportation allowance and meal allowance can be included in the component of the fixed allowance if the provision of the allowance is not linked to attendance and is received regularly by the workers according to the unit of time, be it daily or monthly.

c. Non-Fixed Benefits

Non-permanent benefits are payments that are directly or indirectly related to workers. Where the benefits are given on a non-permanent basis for workers and their discharges and are paid according to unequal units of time. Benefits included in this type of wages are transportation allowances based on attendance, meal allowances which can be included in non-permanent allowances if the benefits are given on the basis of the presence of the workers.

Avoiding Mistakes About UMR

The thing that must be understood when you receive a salary, where the basic salary + fixed allowance + variable allowance, it is not the minimum wage. If based on market law 94 no. 13 of 2003 concerning manpower that the components in the minimum wage usually consist of a basic salary and fixed allowances. Meanwhile, non-fixed benefits are not included in the minimum wage component. The amount of the minimum basic salary is 75 percent of the minimum wage.

Minimum wage equal to Basic salary (75 percent of minimum wage) + fixed allowance (25 percent of minimum wage)

There is one more thing that you need to understand when you receive a monthly salary which usually consists of the basic salary + fixed allowance + variable allowance. The wages you receive do not include the minimum wage. Because, according to Article 94 of Law No. 13 of 2003 concerning Manpower, there states that the minimum wage component only consists of a basic salary and also a fixed allowance. Meanwhile, non-permanent benefits are not included in the minimum wage component.
Amount of UMR/UMP 2022

Definition of UMR and List of UMR Salaries in 34 Provinces of Indonesia

Definition of UMR and List of UMR Salaries in 34 Provinces of Indonesia (2)

Definition of UMR and List of UMR Salaries in 34 Provinces of Indonesia (3)

Tips for Setting the Monthly UMR Salary

Maybe many of us still find it difficult to manage the income that comes from the UMR salary. But actually it is not a complicated problem. It depends on how we can prioritize and consider all needs compared to wants. The following are some ways that you can apply so that you can still save and manage your salary well.

1. Calculating Total Income

Income is the amount of money you can get from various sources such as salary, profit, side business or assets from the investment activities you do. If you have a fixed monthly salary from your main job of 3 million and your part-time income of 1 million, then your total income is 4 million. After knowing the amount of income each month, then next you only need to consider the budget to shop for your needs. Here you have to be able to manage it so that the finances you manage can be enough to meet your daily needs for the next month. Don’t forget to always set aside money to save or invest.

2. Set Salary By Calculating Expenses

You detail the main expenses that you usually use every month, where these primary needs usually include various things such as food needs, rental needs, electricity payments, internet, water, and others. With this, you can make a list or list of expenses that you have adjusted to your secondary and tertiary needs for shopping and so on. For those of you who have to send money to your parents every month, you also need to take note of that. After everything is entered into the list of expenses, you can already know how much expenses you will spend in one month.

3. Consistent in Saving and Investing

After calculating the amount of income and expenses in one month for basic or primary needs. Next, you can add expenses to be used for investment and also save. Maybe many of us have been putting aside this one activity. Because, we still feel that the salary is not much. However, we must start to change that mindset. Where saving is an important thing to do and can help us improve our standard of living in the future.

4. Make a Rational Financial Budget List

In managing salaries so that they can be allocated properly, one way that can be done is by compiling a list of expenses for each month. You need to arrange and also adjust your income and expenses in a balanced way. Make sure again that the amount for expenses or if possible can be less than income each month. If the expenses you need are greater than your income, then you have to use other methods so that you can still adjust your UMR income or salary.

5. Discipline of Monthly Expenditure

As we know that being consistent or disciplined is one of the most difficult things to do. This also often happens in the management of the UMR salary every month. Where when we have made a budget every month and realized the budget. Then the next step is to be disciplined to record all expenses every month. This is so that each recording process becomes easier and allows you to control every expense in one month.

6. Evaluation

If you have recorded a complete list of finances or expenses, it is important for you to evaluate your expenses every month. This evaluation will help you find out what expenses are appropriate and expenses that are not. That way, you can decide to change your budget every month to make it more appropriate and well-managed.

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