Indonesia Implements New Provincial Minimum Wages for 2026

Significant Increases in Major Provinces

Indonesia has seen substantial adjustments in provincial minimum wages for 2026, with Banten and Jakarta leading the changes. The Banten provincial government announced a 6.74% increase to Rp 3,100,881 ¹

, as stipulated in Governor's Decree No. 701/2025. Meanwhile, Jakarta's minimum wage rose by 6.17% to Rp 5,729,876 ²

Source 2

https://finance.detik.com/berita-ekonomi-bisnis/d-8276611/hitung-hitungan-pramono-ump-jakarta-2026-jadi-rp-5-72-juta-naik-6-17

, as announced by Governor Pramono Anung during a press conference at Jakarta City Hall on December 24, 2025.

Economic Context and Implications

These wage adjustments reflect the government's ongoing efforts to balance economic growth with worker welfare. The increases come into effect on January 1, 2026, and are expected to have varying impacts across different sectors. While higher minimum wages may increase operational costs for businesses, they are also likely to boost consumer spending power, particularly in major economic hubs like Jakarta and Banten.

Regional Variations and Future Outlook

The differing percentage increases between Banten (6.74%) and Jakarta (6.17%) highlight regional economic considerations. Jakarta's higher absolute minimum wage reflects its status as the national capital and a major economic center, while Banten's larger percentage increase may be aimed at keeping pace with the cost of living and economic activity in the region. As Indonesia continues to navigate economic challenges, these minimum wage adjustments will play a crucial role in shaping labor market dynamics and consumer spending patterns in 2026.