Salary Cut Permit: Relief for Industry, Threats to Workers

Summary

The government provides relief for labor-intensive industries affected by the COVID-19 pandemic. The Minister of Manpower Ida Fauziyah issued a regulation allowing pandemic-hit labor-intensive companies to cut workers' salaries until December 31, 2021.

The permit is included in the Minister of Manpower Regulation No. 2/2021 on Wages in Certain Labor-Intensive Industries during the Coronavirus Disease 2019 (COVID-19) Pandemic.

In the regulation signed on February 15, 2021, several criteria are applied for industries to receive relief, such as employing at least 200 employees and the portion of labor costs in the production of at least 15 percent. Among labor-intensive industries that can adjust workers' wages are:

  1. Food, beverage, and tobacco industry.
  2. Textile and apparel industry.
  3. Leather and leatherware industry.
  4. Footwear industry.
  5. Children's toy industry.
  6. Furniture industry

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