The Jakarta administration announced Thursday the monthly minimum wage in 2008 would go up from Rp 900,560 to Rp 972,604 (about US$107), an 8 percent increase.
"The decision was based on our assumption that Jakarta's economic growth will reach 6.7 percent next year," Governor Fauzi Bowo said at City Hall.
A gubernatorial regulation has been issued on the 2008 Jakarta minimum wage.
"Our second assumption is that 2008's inflation rate, expected at between 6.2 and 6.6 percent, will be slightly higher than 6 percent this year," he said.
Inflation in Jakarta reached 17.11 percent in 2005, 6.6 percent in 2006 and 5.24 percent as of October this year, according to the Jakarta Statistics Agency.
He said the administration also considered its study that concluded Jakartans would need to earn at least Rp 1,055,275 a month to live "decently" in the capital next year.
The Jakarta minimum wage, Fauzi said, functioned as a social safety net that protected workers by keeping their wages above a "level where their health and nutritional needs are at risk".
He said he hoped the new minimum wage would not place too heavy a burden on companies in the capital.
The administration has gradually increased the provincial minimum wage from Rp 711,843 in 2005 to Rp 819,100 in 2006 and Rp 900,560 this year, despite opposition from employers.