Sultan Abdurrahman, Jakarta – The Labor Party has rejected the formula for calculating the 2026 provincial minimum wage (UMP) proposed by President Prabowo Subianto's cabinet, arguing that it fails to meet workers' basic needs.
Labor Party President Said Iqbal said the formula, which was approved under the latest Government Regulation on Wages, was drafted without meaningful involvement from workers and could potentially weaken wage protections.
The Labor Party, together with its affiliate the Indonesian Trade Union Confederation (KSPI), formally stated its rejection on Thursday, December 18, 2025.
"This rejection is based on the absence of meaningful social dialogue, the closed nature of the regulatory substance, and the potential for serious losses for workers," Said said.
According to Said, the formulation process for the wage regulation violated the principle of meaningful participation. He claimed that workers were never genuinely involved in discussions on the substance of the regulation.
"What happened was merely one-way socialization, and it took place only once at the Wage Council. There was no dialogue and no in-depth discussion," he said.
Said added that the full content of the regulation was never openly presented to labor unions. He noted that the government conducted only a single socialization session, on November 3, 2025, without providing space for substantive debate or joint revisions.
The Labor Party also warned that the 2026 UMP formula could erode wage protection standards, particularly through changes to the definition of Decent Living Needs (KHL).
Said argued that KHL should continue to refer to Minister of Manpower Regulation No. 18 of 2020, which sets 64 components of decent living needs, covering the basic necessities of workers and their families.
However, he said the Ministry of Manpower no longer uses this definition in explaining the 2026 UMP increase formula. "The government appears to be unilaterally creating a new version of the KHL definition. This is very dangerous because KHL is the foundation of wage determination," he said.
Under the new policy, the central government has set the UMP increase formula as inflation plus economic growth multiplied by an alpha coefficient. For 2026, the alpha range set by the central government is between 0.5 and 0.9.
The specific alpha value within that range will be determined at the provincial level, and the result will form the basis for the percentage increase in the UMP in each province.
Said said an alpha value of 0.9 aligns with the Labor Party's proposal and welcomed the government's decision to allow regions to adopt an index as high as that level. However, he criticized the lower limit of 0.5, calling it insufficient to protect workers' purchasing power.
The Labor Party and KSPI said they will push provincial governments to adopt the highest possible alpha value in calculating next year's minimum wage.
"KSPI will mobilize workers across Indonesia to advocate in the Wage Council and to urge governors, regents, and mayors to apply an index of 0.9," Said said.
Meanwhile, Minister of Manpower Yassierli said the government chose an adjustable alpha index to reduce regional disparities, noting that previous policies applied a single figure nationwide.
"We believe this is the best formulation we can produce at this time," he said after an event at the Jakarta Creative Hub on Thursday.
Yassierli also said the government had demonstrated its commitment to workers, citing a 6.5 percent increase in the minimum wage last year, housing assistance for more than 200,000 people, and wage subsidies for 15,000 workers.
– M. Faiz Zaki contributed to the writing of this article.
Source: https://en.tempo.co/read/2074421/why-indonesias-labor-party-rejects-the-2026-minimum-wage-formul