Executive Summary

Key insights and market outlook

Indonesian workers held demonstrations in Jakarta on December 29, 2025, protesting the newly set 2026 Provincial Minimum Wage (UMP), arguing it remains insufficient to cover living costs. The wage increase was deemed inadequate as it fell short of the Living Needs Survey (KHL) standards ²

⁵. Labor unions demand better negotiations with the government while business associations warn of potential negative impacts on employment ¹³.

Full Analysis

02

Deep Dive Analysis

Indonesian Labor Unions Protest 2026 Minimum Wage Decision

Demonstrations Highlight Living Cost Concerns

On December 29, 2025, Indonesian workers staged demonstrations in Jakarta, voicing their dissatisfaction with the newly announced 2026 Provincial Minimum Wage (UMP) ²

³. The labor unions, led by Konfederasi Serikat Pekerja Indonesia (KSPI), argue that the wage increase is insufficient to cover the rising cost of living in major cities like Jakarta ²⁵.

Wage Shortfall Compared to Living Needs Survey

The Jakarta UMP for 2026 was set at Rp 5.73 million, an increase from Rp 5.39 million in the previous year. However, labor activists point out that this amount remains Rp 160,000 short of the Rp 5.89 million required to meet the city's Living Needs Survey (KHL) standards ⁵

. This shortfall has been a major point of contention, with workers claiming that the increase actually reduces their purchasing power ².

Business Community's Concerns About Wage Impact

While labor unions demand higher wages, business associations like Asosiasi Pengusaha Indonesia (Apindo) express concerns that excessive wage increases could lead to layoffs ⁴

. Apindo's Labor Sector Chairman, Bob Azam, noted that while wage hikes provide temporary relief, they don't address the underlying issues such as shrinking middle-class population and productivity challenges ⁴.

Government and Tripartite Dialogue

The Indonesian Chamber of Commerce and Industry (Kadin) has called for a more balanced approach, emphasizing the need for sustainable business practices while understanding workers' welfare demands ¹

. Kadin's Erwin Aksa suggested that the tripartite dialogue mechanism should be optimized before making such critical decisions ¹. The government now faces the challenge of balancing these competing interests while maintaining economic stability.

References