Indonesian Government Prepares 2026 Minimum Wage Policy Amidst Business Concerns

Balancing Labor Costs and Economic Conditions

The Indonesian government is currently finalizing the 2026 Provincial Minimum Wage (UMP) policy, with the announcement expected by November 21, 2025. The Indonesian Employers Association (Apindo) has expressed concerns regarding the formulation of this policy, emphasizing the need for a fair and balanced approach.

Business Community's Concerns

Apindo Chair Shinta Kamdani has urged the government to consider the diverse economic conditions across different regions when determining the minimum wage. This request comes after the 6.5% increase in the minimum wage for 2025, which was implemented without a clear formula and surprised many businesses. The lack of transparency in the previous year's adjustment has led to objections from several entrepreneurs who felt that the sudden increase was not aligned with their industry's conditions.

Call for Fairness and Predictability

Shinta Kamdani emphasized the importance of a fair and predictable formula for determining the minimum wage. She stated that the decision should not be shocking but rather should be fair to both employers and workers. The current industrial conditions in Indonesia are still very diverse, and a one-size-fits-all approach could potentially harm certain sectors.

Implications for Businesses and Workers

The outcome of the 2026 UMP policy will have significant implications for both businesses and workers in Indonesia. A balanced approach that considers the economic conditions of various regions could help mitigate potential negative impacts on businesses while ensuring that workers receive fair compensation. The government's decision is eagerly awaited by stakeholders across the country.