M. Faiz Zaki, Jakarta – Indonesia's Minister of Manpower Yassierli said the government will apply an adjustable index, with an alpha range of 0.5 to 0.9, to calculate the increase in Provincial Minimum Wages (UMP) for 2026.
He said the approach is intended to reduce regional disparities, as previous policies relied on a single uniform figure for all provinces.
"We believe this is the best formula we can produce at this time," Yassierli said when speaking to reporters at the Jakarta Creative Hub on Thursday, December 18, 2025.
Yassierli said the government has demonstrated its commitment to workers by raising the minimum wage by 6.5 percent last year, providing housing assistance to more than 200,000 people, and distributing wage subsidies to 15,000 workers.
The government, he added, is also preparing regulations on Job Loss Insurance (JKP), which would ensure laid-off workers receive 60 percent of their wages for up to six months following termination.
According to Yassierli, the formulation of the 2026 UMP has accommodated workers' aspirations and was discussed with multiple stakeholders, including labor unions and business groups.
"We believe that our colleagues from labor unions and the business community can accept this policy, as there is still considerable groundwork to be done together," he said.
The minister said he had not received formal reports of rejection of the 2026 UMP formula and instead viewed it as the most feasible decision under current conditions. He added that President Prabowo Subianto had approved the policy.
Going forward, the Ministry of Manpower will provide technical assistance to regional wage councils to help them assess local economic conditions when determining minimum wages. "We will guide regional wage councils on how to make wise decisions based on their respective economic situations," Yassierli said.
Regional governments have until December 24, 2025, to set provincial, district, and city minimum wages for next year, allowing them to tailor wage adjustments to local economic realities.
Labor unions raise objections
Earlier, the Confederation of Indonesian Trade Unions (KSPI) rejected the draft Government Regulation on Wages, which forms the basis for determining the 2026 UMP.
KSPI President and Labor Party leader Said Iqbal said workers opposed the regulation due to a lack of meaningful consultation.
Iqbal said discussions with labor representatives were held only once and did not allow for substantive input.
"Public participation, particularly from labor unions, was not properly included in the drafting of the wage regulation that will determine the 2026 minimum wage increase," he said during a virtual press conference on Tuesday, December 16, 2025.
He also warned that the regulation could allow certain regions deemed to have exceeded wage thresholds to receive no increase, even as prices of basic necessities continue to rise.
Iqbal argued that the minimum wage increase should be at least 6.5 percent, similar to last year, or calculated using a higher index in the range of 0.7 to 0.9.
– Anastasya Lavenia Yudi contributed to the writing of this article.
Source: https://en.tempo.co/read/2074429/indonesia-defends-new-2026-minimum-wage-formula-amid-union-concern