Does Minimum Wage Policy Effectively Improve Unskilled Workers Welfare in Indonesia?

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With a policy of minimum wage, it will encourage the excess of worker supply (Editya, 2013). It can be like that because people will see a wage level that high enough. For example for a few of high school alumni, they would like to get a work rather than continue to the higher education, because seeing the profitable working wage. This thing is contradict with the exist of the decrease of worker or work termination (PHK in Indonesia) that happens after the existent of minimum wage policy where a company has no capability to pay a worker’s wage

- Recommendation

Minimum wage policy has been become debatable topic globally. Since introduced first time in 1894 in New Zealand (Minimum Wages: Opportunities and Challenges , 2002), pro and contra about the minimum wage policy always flare up in most of country in the world.

One of country is England; minimum wage policy that has conducted England can be our examples in Indonesia if still want to conduct minimum wage policy. The implemented policy does a different approach, as well as senior worker and younger worker. Young worker get the lower income than the older worker income.

This differentiation will change every year in the end so that in the end younger worker will get a same wage with the senior one. The clearest effect from this policy is from the spread of wage. This policy seems can improve the income and decrease the income gap. The income gap in England has been drop drastically since 1990s (Sinar Harapan, 2012) .

The most benefit patties from this policy are woman whose income is not really much when compared with male workers. Other parties who benefited prom this policy are the workers who have been earning with very low income.

Now the task of policy makers is to ensure that this policy does not cause negative effects for the labor market. It is become very important to remember nowadays our labor market is very large with the number of youth are getting bigger and should be utilized as much as possible.

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References

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Editya, D. A. (2013, September 9). Benarkah Kenaikan UMR Merugikan Pemberi Kerja? Retrieved June 27, 2016, from kompasiana.com: http://www.kompasiana.com/ve08.blogspot.com/benarkah-kenaikan-umr-merugikan-pemberi-kerja_553022176ea834f9328b45a8

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Jonathan, M., & Jeremy, W. (2013, December). Effects of the Minimum Wage on Employment Dynamics. p. 27.

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Sinar Harapan. (2012, December 5). Pro kontra upah minimum. Daily.

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Wahyudi, M. N. (2013). Negative and Positive Effect from the Incrase of Regional Minimum Wage. Bangkalan: Universitas Trunojoyo Madura.