Business circles are responding to proposals from labour unions\nrequesting a minimum wage increase of 7.5% to 9.5% for 2027. The\nbusiness community maintains that the scale of wage increases should\ntake worker productivity into account.<\/p>\n
Bob Azam, Head of Labour Affairs at the Indonesian Employers\nAssociation (Apindo), stated that productivity is a crucial factor\nbefore the government determines minimum wage adjustments. \u201cIt must be\nassessed how many per cent productivity increases before setting the\nwage hike,\u201d Bob told CNBC Indonesia on Friday (18\/9\/2026).<\/p>\n
According to him, worker productivity in Indonesia is estimated to\ngrow by only around 3% to 3.5%. Consequently, a minimum wage increase\nsignificantly higher than productivity growth is viewed as having the\npotential to exert pressure on inflation. \u201cI believe our productivity\nrises by 3% to 3.5%. Therefore, it is impossible for the increase to be\nfar from that figure, as it would impact inflation. It would be a pity\nfor self-employed workers,\u201d he said.<\/p>\n
Bob also suggested that the focus of labour unions should not solely\nbe directed at minimum wage increases, but rather towards improving\nworker purchasing power. \u201cThe focus of labour unions should be on\npurchasing power, not just the minimum wage increase,\u201d he added.<\/p>\n
When asked whether a 9.5% increase could be implemented, Bob\nemphasised that the figure needs to be reconsidered against\nproductivity. \u201cIf productivity is 3.5% and wages rise by 9.5%, that\nmeans an additional 6% inflation. It is up to our country if we want\nthat inflation,\u201d he asserted.<\/p>\n
Labour Proposes 7.5% to 9.5% Increase<\/p>\n
Previously, the Confederation of Indonesian Trade Unions (KSPI) and\nthe Labour Party proposed a minimum wage increase of 7.5% to 9.5% for\n2027. This proposal applies to both Provincial Minimum Wages (UMP) and\nRegency\/City Minimum Wages (UMK).<\/p>\n
President of KSPI and the Labour Party, Said Iqbal, stated that the\nproposal was submitted early, as the 2027 UMP determination is scheduled\nfor 1 November 2026, while UMK and sectoral minimum wages are due by 10\nNovember 2026.<\/p>\n
\u201cKSPI and the Labour Party propose that the 2027 minimum wage, both\nUMP and UMK, falls within the range of 7.5% to 9.5%. We will fight for\nthis figure within the Wage Council and through various constitutional\nchannels,\u201d said Said Iqbal.<\/p>\n
Said explained that there are three main components used by KSPI and\nthe Labour Party to calculate this proposal: the average annual national\ninflation rate, the average national economic growth rate, and a\nspecific index. For the specific index, KSPI used a figure of 0.9,\nconsistent with the range provided in Government Regulation Number 49 of\n2026, which spans 0.5 to 0.9.<\/p>\n
\u201cIn proposing the 2027 minimum wage and sectoral minimum wage, KSPI\nuses the average national inflation, average national economic growth,\nand a specific index of 0.9. The government regulation provides a range\nof 0.5 to 0.9, so using 0.9 is well-founded,\u201d Said Iqbal asserted.<\/p>\n
The data used covers the period from October 2025 to September 2026.\nHowever, as September 2026 data has not yet been released by the Central\nBureau of Statistics (BPS), the preliminary calculation uses data up to\nAugust 2026.<\/p>\n
Based on official BPS data gathered by KSPI for the period of October\n2025 to August 2026, the average national inflation rate stood at 3.20%,\nwhile the average national economic growth reached 5.43%.<\/p>\n
\u201cEven when the September data is released, we expect the figures will\nnot differ significantly. Therefore, for now, we are using an average\nnational inflation of 3.20% and national economic growth of 5.43%,\u201d he\nsaid.<\/p>\n
By incorporating the 0.9 specific index into the calculation method,\nKSPI arrived at an average national increase of approximately 7.7%. This\nfigure serves as the basis for the proposed lower limit of 7.5%.<\/p>\n
Said noted that economic conditions vary by province and regency.\nTherefore, KSPI is not proposing a single figure for all regions, but\nrather a range of 7.5% to 9.5%. He cited the difference in economic\nconditions between West Java and North Maluku, as well as Bekasi Regency\nversus Gresik Regency.<\/p>\n
Labour Highlights Purchasing Power<\/p>\n
In addition to nominal wage increases, Said also highlighted the\npressure of basic commodity prices on worker purchasing power. He argued\nthat a wage increase would be meaningless if the price of daily\nnecessities rises even faster. Consequently, labour groups will also\nurge the government to control the prices of essential goods.<\/p>\n
\u201cIt is futile for nominal wages to rise if the amount of goods that\ncan be purchased actually decreases. For example, previously 1 million\nRupiah could buy five items. After the wage rises to 1.5 million Rupiah,\nit can only buy three items because prices have surged. Nominally, the\nwage has increased, but purchasing power and real wages have actually\ndeclined,\u201d explained Said Iqbal.<\/p>\n
He emphasised that workers require an increase in real wages, not\njust nominal figures. \u201cLabour will certainly fight for the control of\nbasic commodity prices. What workers need is an increase in real wages,\nnot just a nominal increase that is subsequently eroded by inflation,\u201d\nconcluded Said Iqbal.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/entrepreneurs-predict-2027-minimum-wage-increase-will-not-exceed-3-5-here-is-why-1789725525", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }