Executive Summary

Key insights and market outlook

Indonesian labor unions, led by KSPI and Partai Buruh, are staging protests on December 29-30, 2025, against the 2026 minimum wage increase to Rp5.73 million in Jakarta, arguing it remains lower than surrounding areas like Bekasi and Karawang where the minimum wage is set at Rp5.95 million. The unions, representing major companies including Bank Mandiri, BNI, and Standard Chartered, contend the increase is insufficient to cover living costs ¹

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Full Analysis

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Deep Dive Analysis

Indonesian Labor Unions Protest 2026 Minimum Wage Increase

Workers Challenge Jakarta's Lower Wage Compared to Surrounding Areas

Indonesian labor unions, led by the Confederation of Indonesian Workers Unions (KSPI) and the Labor Party, are organizing protests on December 29-30, 2025, in response to the announced 2026 Provincial Minimum Wage (UMP) for Jakarta ¹

². The unions are contesting the Jakarta government's decision to set the 2026 UMP at Rp5.73 million per month, arguing that it is lower than neighboring regions such as Bekasi and Karawang, where the minimum wage has been set at Rp5.95 million per month ¹.

Economic Rationale Behind the Protests

The labor unions, representing workers from major companies including Bank Mandiri, Bank BNI, and Standard Chartered, assert that the cost of living in Jakarta is higher than in surrounding areas. They question the logic behind a lower minimum wage in Jakarta compared to its suburbs. Said Iqbal, President of KSPI and the Labor Party, highlighted the disparity by pointing out that large corporations and foreign companies based in Jakarta should reasonably pay higher wages compared to manufacturing plants in other regions ¹

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Broader Context of Wage Growth

According to a recent study by the World Bank, as reported by Kontan, despite the average UMP increase being projected at 6-7% in 2026, the real wages of workers continue to decline. The World Bank's Indonesia Economic Prospects report for December 2025 noted that average real wages in Indonesia have been contracting at a rate of 1.1% annually between 2018 and 2024. This trend underscores the unions' concerns that the nominal increase in minimum wage may not translate into improved living standards for workers ³

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Planned Protests and Potential Impact

The protests are planned in two phases: around 1,000 workers are expected to gather at the National Monument (Patung Kuda) on December 29, while a larger turnout of at least 10,000 workers accompanied by a convoy of 10,000 to 20,000 motorcycles from various parts of West Java is anticipated on December 30 ¹

². The demonstrations are likely to cause significant disruptions in Jakarta, drawing attention to the workers' grievances regarding the minimum wage and broader economic policies affecting their livelihoods.

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