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International Business Management
Year: 2014  |  Volume: 8  |  Issue: 1  |  Page No.: 7 - 12

Enforcing Minimum Wage through Criminal Sanctions: A Case of Indonesia

Budi Santoso and K.H. Hassan    

Abstract: This study, examines the enforcement of the minimum wage in Indonesia through criminal sanctions. The minimum wage is stipulated under the Manpower Act 2003. Under the Act, employers are prohibited from paying wage lower than the stipulated minimum wage. Employer who violates the minimum wage will be subjected to criminal sanctions in prison and/or a fine. Since 2009, there have been several district courts decisions imposing criminal sanctions on employers who violate the minimum wage provision. One example was a 2008 court decision in the case of Sri Rejeki Mebelindo where in this case, the judges sentenced the director to one and a half years imprisonment and a fine of 250 million rupiah for having paid wages lower than the stipulated minimum wage. In addition, the study proposes that in enforcing the minimum wage through the criminal sanctions, it is necessary to consider that the sanctions will not be counter-productive to the company's business operations, especially when the sanctions are imposed in the form of imprisonment not in the form of a fine.

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