Nandito Putra, Jakarta – Business circles assess the plan to increase the Regional Minimum Wage (UMP 2026), valued at 0.5-0.9 alpha, as incongruent with the actual state of the business world. According to the Chair of the Indonesian Employers' Association (Apindo), Shinta W. Kamdani, entrepreneurs have proposed an alpha of 0.1-0.5 in tripartite dialogues with the National Wage Council.
Shinta stated that the proposed figures are more proportional to adjustments based on the ratio of the minimum wage to the decent living needs in each region. She understands that wage policies aim to protect workers and maintain the purchasing power of the community.
"However, the policy needs to be implemented carefully and proportionally to remain in line with the capability of the business world and the diverse employment conditions in each region," Shinta said in a written statement on Thursday, December 18, 2025.
Shinta mentioned that many industrial sectors are still growing below the national average, and some are even contracting, which limits the room for wage adjustments.
"Wage policies need to be implemented carefully to protect workers without disrupting the sustainability of businesses and the creation of formal jobs," she said.
Meanwhile, Apindo's Head of Employment Affairs, Bob Azam, believes that the minimum wage should serve as the lower limit or safety net. According to him, higher wage increases should be pursued through bipartite negotiations at the company level, taking into account productivity and business capability.
Previously, the Minister of Manpower, Yassierli, ensured that UMP 2026 would still increase in all provinces, including areas with negative economic growth. The government has determined the inflation formula to be economic growth multiplied by an alpha ranging from 0.5 to 0.9. The Regional Wage Council and governors will make the final determination by December 24, 2025.
"Of course, there is no such thing as a decrease in wages," said Yassierli in a press conference at the Ministry of Manpower office on Wednesday, December 17, 2025.
Yassierli stated that the increase in UMP could occur thanks to the calculation formula. The government has set a formula for next year's UMP calculation: inflation + (economic growth x alpha). Alpha represents the contribution of labor to economic growth. The specific range of alpha or indexes is set at 0.5-0.9.
Thus, Yassierli stated that the Regional Wage Council will consider the increase in UMP based on the inflation rate. He is convinced that the Regional Wage Council has data on economic growth, the causes, and supporting sectors. "We are very confident that the Regional Wage Council has the data and knows that economic growth is high," he said.
Yassierli stated that the Ministry of Manpower coordinates the calculation of UMP 2026 with the Regional Wage Council. President Prabowo Subianto approved the calculation formula for UMP 2026 by signing the Government Regulation (PP) on Wages on Tuesday, December 16, 2025.
The Regional Wage Council will calculate the minimum wage increase and submit it as a recommendation to the governor.
Yassierli stated that the Wage Regulation also regulates the obligation of governors to determine the UMP and the minimum wage for regencies/cities (UMK). Additionally, the regulation obligates governors to determine both the provincial sectoral minimum wage (UMSP) and the regency/city sectoral minimum wage (UMSK).
– Alfitria Nefi Pratiwi contributed to this article
Source: https://en.tempo.co/read/2074380/businesses-object-indonesias-2026-minimum-wage-increase-formul