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View all search resultsProposed minimum wage hike rattles employers, falls short for unions
Under the new formula, provincial minimum wages would rise by between 5.3 percent and 7.3 percent, an increase employers deem too steep.
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Workers complete production of fashion products Oct. 29, 2025, at the Tectona Textile Factory in Pameungpeuk, Bandung Regency, West Java. (Antara/Raisan Al Farisi)
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mployers and labor unions have both voiced dissatisfaction with the government’s new formula for setting minimum wages in 2026, with businesses warning that the proposed increases are too high and could push up prices, while unions say they still fall short of meeting living standards.
President Prabowo Subianto on Tuesday signed a regulation setting a new formula, broadly in line with previous years, combining inflation and economic growth and adjusted by an “alpha” coefficient reflecting labor’s contribution within a specified range.
The coefficient for next year will range between 0.5 and 0.9, with provincial leaders having until Dec. 24 to determine the size of next year’s minimum wage increase using the new formula.
Under the formula, provincial minimum wages would rise by between 5.3 percent and 7.3 percent, an increase employers deem too steep and misaligned with fragile business conditions and productivity growth of only around 1.5 to 2 percent.
“This level of increase is too high relative to productivity levels and will weigh heavily on businesses,” Subchan Gatot, deputy head of labor affairs at the Indonesian Employers Association (Apindo), told The Jakarta Post on Thursday.
“Companies do not oppose wage increases,” he emphasized. “But when wages rise far above productivity, the difference will be absorbed in higher prices, which is counterproductive when purchasing power is already weak.”
Apindo chairwoman Shinta Kamdani said the government’s chosen range did not reflect the “uneven performance” across industries, with several sectors still growing below the national economic rate.
