Executive Summary

Key insights and market outlook

The Indonesian government, led by Coordinating Minister for Economic Affairs Airlangga Hartarto, has finalized the 2026 Provincial Minimum Wage (UMP), despite opposition from labor unions ¹

². The decision was based on a formula considering inflation, economic growth, and a raised alpha index of 0.5-0.9% ². Critics argue that the set wage, particularly in Jakarta, is insufficient for a decent living standard ³.

Full Analysis

02

Deep Dive Analysis

Indonesian Government Finalizes 2026 Minimum Wage Amid Labor Protests

Controversy Surrounds UMP 2026 Decision

The Indonesian government has officially determined the 2026 Provincial Minimum Wage (UMP), a decision that has sparked controversy among labor unions and workers' rights advocates ¹

². Coordinating Minister for Economic Affairs Airlangga Hartarto defended the government's formulation, stating that it was based on a comprehensive analysis of various economic indicators.

Calculation Methodology Under Scrutiny

The UMP calculation for 2026 considered inflation rates, regional economic growth, and an adjusted alpha index ranging from 0.5% to 0.9% ²

. Airlangga explained that this formula ensures that the minimum wage is set at a level that reflects both economic conditions and the need to maintain workers' purchasing power. However, critics argue that the resulting figures, particularly for Jakarta, are below the living wage ³.

Labor Union Concerns and Financial Implications

Labor unions have expressed strong dissatisfaction with the new UMP, especially in Jakarta where the set wage is perceived as inadequate compared to neighboring regions like Bekasi and Karawang ³

. Financial experts suggest that while the nominal value is important, workers must also focus on budgeting and financial planning to make the most of their income ³.

References