The Indonesian Employers Association (Apindo) is advocating for a conservative approach to the “specific index” used in adjusting the 2026 minimum wage. This push comes as the Ministry of Manpower plans to abolish the national benchmark for minimum wage determination, shifting towards a more localized calculation.
All stakeholders have so far reached a consensus on the minimum wage formula for the upcoming year: a combination of the inflation rate and the product of a specific index multiplied by economic growth. Consequently, each region’s minimum wage will be tailored to its unique inflation and economic growth figures.
“North Maluku experienced economic growth of up to 30% over 12 months. Therefore, we hope the specific index will not be set too high, to prevent an exacerbation of disparity between regions,” stated Bob Azam, Head of Apindo’s Manpower Sector, to Katadata.co.id on Friday, November 21.
Bob underscored that the minimum wage represents just one of four primary wage systems deliberated within the National Wage Council (Depenas). For context, Depenas comprises three key elements: labor unions, employers, and the government.
The other three critical wage systems include structured wage scales, productivity-based wages, and professional wages. In light of this, Bob urged that the determination of next year’s minimum wage should ideally stem from a bipartite agreement between employers and workers.
“Apindo does not wish for workers to be paid the absolute minimum, but rather wages that are fair and adapted to the specific conditions of each company. The essence lies in a bipartite agreement that reflects the unique circumstances of individual businesses,” he explained.
Within Depenas, labor, employers, and the government continue to propose divergent figures for the specific index: labor suggests 0.9-1.0, employers propose 0.1-0.5, and the government offers 0.2-0.7.
The Confederation of Indonesian Trade Unions (KSPI) has expressed agreement with the proposal to localize the minimum wage formula for the coming year. However, labor representatives insist that Depenas must set the specific index for all regions at 1.0.
Said Iqbal, President of KSPI, articulated that wage disparities across Indonesia are an inherent consequence of the current wage system. He elaborated that the prevailing wage framework considers regional economic conditions, which naturally leads to varying minimum wages.
“Wage disparity between regions will never disappear because Indonesia adheres to a regional minimum wage system, not a national minimum wage system with a single value,” Said told Katadata.co.id on Friday, November 21.
Minimum Wage Protests
Said announced that hundreds of thousands of workers are still poised to stage demonstrations in front of the Presidential Palace in Jakarta and the House of Representatives regarding the minimum wage. This is primarily because the government is expected to finalize the specific index within its proposed range of 0.2-0.7.
Said’s calculations suggest that utilizing the government’s proposed index would result in a national minimum wage increase of merely around 3.75%. This translates to an average minimum wage hike of only approximately Rp 90,000 per month across all regions next year.
Nevertheless, Said confirmed that KSPI, alongside other labor confederations, has agreed to postpone the demonstration from Saturday, November 22, to the following Monday, November 24. He reasoned that holding the protest on a weekend would be ineffective, as staff at the Presidential Palace and the House of Representatives would not be working.
“November 22, 2025, falls on a Saturday holiday. Consequently, the Presidential Palace and the House of Representatives will also be closed. Therefore, the action was deemed ineffective, and it was ultimately agreed that the protest would take place on November 24, 2025,” he stated.
Labor unions are proposing a minimum wage increase of at least 6.5% for next year. According to Iqbal, this demand has been reduced from their initial call for an 8.5% to 10.5% increase, reflecting workers’ understanding that the national economic conditions when President Prabowo Subianto set the minimum wage last year are not significantly different from the current climate.
Summary
Asosiasi Pengusaha Indonesia (Apindo) mengusulkan pendekatan konservatif untuk “indeks tertentu” dalam penyesuaian Upah Minimum Provinsi (UMP) 2026, untuk mencegah peningkatan disparitas upah antar daerah. Konsensus formula UMP tahun depan akan menggunakan kombinasi inflasi dan hasil perkalian indeks tertentu dengan pertumbuhan ekonomi, dihitung secara lokal untuk setiap wilayah. Dalam Dewan Pengupahan Nasional (Depenas), serikat pekerja mengusulkan indeks 0,9-1,0, pengusaha 0,1-0,5, sementara pemerintah menawarkan 0,2-0,7.
Konfederasi Serikat Pekerja Indonesia (KSPI) setuju dengan lokalisasi formula UMP tetapi menuntut indeks spesifik ditetapkan 1,0 untuk semua daerah. Presiden KSPI, Said Iqbal, menyatakan bahwa disparitas upah regional memang merupakan konsekuensi dari sistem upah yang berlaku di Indonesia. Serikat pekerja berencana menggelar demonstrasi pada 24 November 2025, menuntut kenaikan UMP minimal 6,5%, karena indeks usulan pemerintah diperkirakan hanya akan menghasilkan kenaikan sekitar 3,75%.
