The Role of Labor Unions in Determining Minimum Wage in Indonesia

Abstract

Purpose: This research aims to analyze the importance of labor unions in decent living standards to improve labor welfare to increase labor’s minimum wage and respond to the implementation of Government Regulation No. 78 of 2015 about wages. Theoretical framework: The labor union is the labor representative that has an essential role in determining minimum wage in the regency because the labor union is a member of the Wage Council. Implementing Government Regulation No. 78 of 2015 concerning wages leads to wage disparities, especially in East Java province. The determination of minimum wage has become a crucial and complex problem as it involves the interests of labor, companies, and government. Every of the wage disparities increases that influenced labor conditions became less conducive, and companies relocated their businesses. Labor unions’ important role is to fight to improve labor’s welfare. Design/Methodology/Approach: This research used a qualitative approach. The research location is in East Java, with informants who are labor union in East Java, East Java Indonesian Business Association, East Java Province Wage Council, East Java Labor and Transmigration Office, and Regency Labor Office. The data was collected through interviews. Findings: This research’s results find that Labor Union’s important role influenced wage discretion implemented by the East Java governor, and Labor Union’s important role successfully decreased wage disparity. Research, Practical & Social implications: This research is still limited to important role of Labor Union in minimum wages. Future research can examine other roles of Labor Union in helping improve workers' welfare, for example contributing to improving labor regulations. Originality/Value: The study explore important role of labor union from various points of view, namely from East Java Indonesian Business Association, East Java Province Wage Council, East Java Labor and Transmigration Office, and Regency Labor Office.