Executive Summary

Key insights and market outlook

Six Indonesian provinces have announced their 2026 Provincial Minimum Wage (UMP), with increases ranging from 6% to 9% ²

³. The new regulations follow the government's new wage formula introduced through Government Regulation No. 49/2025, considering factors like inflation and economic growth. Jakarta is expected to follow suit soon, with Governor Pramono Anung indicating a likely increase based on the new formula.

Full Analysis

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Deep Dive Analysis

Indonesian Provinces Announce 2026 Minimum Wage Increases

New Minimum Wage Regulations Across Provinces

Six Indonesian provinces have officially announced their 2026 Provincial Minimum Wage (UMP), with percentage increases ranging between 6% to 9% ²

³. The recent announcements follow the implementation of Government Regulation No. 49/2025, which introduced a new wage calculation formula considering inflation, economic growth, and a specific alpha index reflecting workers' contribution to the economy.

Provincial Breakdown of Minimum Wage Increases

North Sumatra: 7.9% increase to Rp3,228,971 ²
Source 2
https://aktual.kontan.co.id/news/enam-provinsi-tetapkan-ump-2026-kenaikan-69-mulai-berlaku-tahun-depan
South Sumatra: 7.1% increase to Rp3,942,963 ²
Source 2
https://aktual.kontan.co.id/news/enam-provinsi-tetapkan-ump-2026-kenaikan-69-mulai-berlaku-tahun-depan
Other provinces followed similar patterns, with variations between 6-9%

National Regulatory Framework

The new wage regulation, signed by President Prabowo Subianto, establishes a standardized formula for minimum wage calculation: Inflation + (Economic Growth × Alpha) where Alpha ranges between 0.5 and 0.9 ¹

. This formula aims to balance workers' welfare with business sustainability.

Jakarta's Upcoming Decision

Jakarta is expected to announce its 2026 UMP soon, with Governor Pramono Anung confirming that the province will adhere to the new national formula. Based on Jakarta's Q3 2025 economic data (4.96% growth) and inflation rate (2.67%), simulations suggest a potential UMP of up to Rp5.79 million ¹

.

Economic Implications

The wage adjustments across provinces reflect the government's efforts to balance economic growth with workers' welfare. While the increases may present challenges for businesses, particularly in labor-intensive sectors, they also signal potential boosts in consumer spending power.

References