The Indonesian Confederation of Trade Unions (KSPI) and the Labour\nParty have proposed a minimum wage increase of 7.5% to 9.5% for the year\n2027. This proposal applies to both Provincial Minimum Wages (UMP) and\nRegency\/City Minimum Wages (UMK), taking into account the differences in\ninflation and economic growth across various regions.<\/p>\n
This was stated by the President of KSPI and President of the Labour\nParty, Said Iqbal. According to Said Iqbal, the proposal needs to be\npresented early because the 202ng UMP is scheduled to be determined on 1\nNovember 2026, while the UMK and sectoral minimum wages are scheduled\nfor 10 November 2026.<\/p>\n
\u201cKSPI and the Labour Party propose that the 2027 minimum wage\nincrease, for both UMP and UMK, be in the range of 7.5% to 9.5%. We will\nfight for this figure within the Wage Council and through various\nconstitutional channels,\u201d said Said Iqbal.<\/p>\n
Said Iqbal explained that there are three main components used by\nKSPI and the Labour Party to calculate the proposed 2027 minimum wage\nincrease: the annual national average inflation (year-on-year), the\nnational average economic growth, and a specific index. For the specific\nindex, KSPI uses a figure of 0.9, in accordance with the range provided\nin Government Regulation Number 49 of 2026, which is between 0.5 and\n0.9.<\/p>\n
\u201cIn proposing the minimum wage and sectoral minimum wage for 2027,\nKSPI uses the national average inflation, national average economic\ngrowth, and a specific index of 0.9. The government regulation provides\na range of 0.5 to 0.9, so the use of 0.9 has a basis,\u201d Said Iqbal\nasserted.<\/p>\n
The data used covers the period from October 2025 to September 2026.\nHowever, as the September 2026 data has not yet been published by the\nCentral Bureau of Statistics (BPS), the preliminary calculation uses the\nlatest available data up to August 2026.<\/p>\n
According to Said Iqbal, based on official BPS data collected for the\nperiod of October 2025 to August 2026, the national average inflation\nstands at 3.20%, while the national average economic growth is at\n5.43%.<\/p>\n
\u201cEven when the September data is released, we estimate the figure\nwill not differ significantly. Therefore, for now, we are using a\nnational average inflation of 3.20% and national economic growth of\n5.43%,\u201d he said.<\/p>\n
By incorporating a specific index of 0.9 into the calculation method\nused by KSPI, a national average increase of approximately 7.7% is\nobtained. This figure serves as one of the bases for determining the\nlower limit of the proposed minimum wage increase of 7.5%.<\/p>\n
\u201cOn a national average, the calculation results in approximately\n7.7%. However, because some regions have lower economic growth than the\nnational average, we have adjusted our proposed lower limit to 7.5%,\u201d he\nexplained.<\/p>\n
Said Iqbal emphasised that the economic conditions of every province\nand regency\/city differ. Inflation and economic growth in West Java, for\nexample, are not the same as in North Maluku. Similarly, the economic\nconditions in Bekasi Regency are not the same as in Gresik Regency.\nTherefore, KSPI is not proposing a single figure, but rather an increase\nrange of 7.5% to 9.5%.<\/p>\n
Wage Disparities Must Be Reduced<\/strong><\/p>\n Addressing the issue of wage gaps or disparities between regions,\nSaid Iqbal explained that there are generally two methods for\ndetermining minimum wages globally. First, the Living Wage (KHL) survey\nmethod. Second, a method based on macroeconomic indicators such as\ninflation, economic growth, and a specific index.<\/p>\n Furthermore, there are two models of wage setting. The first model is\na single wage, which is a single minimum wage value applicable\nnationally, as implemented in countries such as Brazil and Germany. The\nsecond model is regional minimum wage, which is applied in Indonesia and\nseveral ASEAN countries.<\/p>\n Since Indonesia uses a regional system, differences in wages between\nprovinces and regencies\/cities cannot be entirely avoided.<\/p>\n \u201cThe UMP in Jakarta differs from West Java, Maluku, or Papua. Even\nthe UMK between regencies\/cities within one province differs. As long as\nwe use a regional model, wage disparity will inevitably occur,\u201d said\nSaid Iqbal.<\/p>\n He cited changes in minimum wages in Bekasi and Karawang as an\nexample. Previously, the minimum wage in Bekasi was lower than in\nJakarta. However, after many industries developed and moved to Bekasi,\nthe minimum wage value increased, even surpassing Jakarta. A similar\nsituation occurred in Karawang after it developed into an automotive\nindustry hub.<\/p>\n To reduce disparity, Said Iqbal proposed the use of a zoning system\nor industrial area rings. In the past, industrial areas with similar\neconomic characteristics and living needs were placed within one ring\nwith the same or similar minimum wage values.<\/p>\n \u201cRing one in West Java could include Bekasi, Karawang, Bogor, Depok,\nand even connect with Jakarta. In East Java, ring one could include\nMojokerto, Sidoarjo, Gresik, and Surabaya. With a ring system,\ndisparities between industrial areas can be minimised,\u201d he\nexplained.<\/p>\n Industrial development factors also influence wage increases. Regions\nthat develop into new industrial areas will eventually experience\nchanges in wage levels through economic mechanisms. However, the nature\nof the industry also plays a role. Labour-intensive industries tend to\nmaintain lower wages, whereas capital-intensive industries generally\ndrive increases in productivity and wages.<\/p>\n He cited regions such as Batang and Pekalongan, which are developing\nmany labour-intensive industries, as well as Subang and Purwakarta,\nwhere minimum wages are beginning to rise alongside industrial\ndevelopment.<\/p>\n Rising Food Prices Erode Real Wages<\/strong><\/p>\n Responding to the rising prices of basic necessities, Said Iqbal\nensured that labourers will also voice opposition against uncontrolled\nprice increases. According to him, the rise in the price of basic food\nitems will directly hit the purchasing power of workers.<\/p>",
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