Increasing minimum wages have raised concerns in Indonesia, because it may affect investment and competitive strength of Indonesia in the future, World Bank said in Indonesia economic quarterly report here, on Tuesday.

World Bank lead economist and economic advisor for Indonesia, Ndiame Diop, said the rising of minimum wages may trigger increases in wages and salaries for all contracted workers, not only for low-wage workers, affecting investment and competitiveness of Indonesia in the future. Government must pay attention in minimum wages policy.

Indonesia's capital city governor, Joko Widodo, has agreed to increase minimum wages in Jakarta around 44 percent, from 1.53 million rupiah into 2.2 million rupiah for 2013. But the increases are not consistent across all regions in Indonesia since minimum wages are set at the provincial, and sometimes also district and municipality, levels of government. For example, minimum wages in North Sumatra will rise by 8.8 percent and in Papua by 7.9 percent.

But the increases still be higher than the average level of 7.6 percent from 2006 to 2012. According to World Bank report, increases in the minimum wage are associated with a decrease in regular employment.

Analysis of the period from 1993 to 2007 shows there were indications that employers responded by hiring fewer employees, leading to jobs contraction in the regular employment, while minimum wage increases had no apparent effect on overall employment or unemployment rates. Endi

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