Entrepreneurs Begin Calculating 2027 Minimum Wage, Here Are the Leaks

As September begins, discussions regarding the minimum wage have already commenced. The Indonesian Employers Association (APINCO) is highlighting the issue of minimum wage gaps between different regions in Indonesia. These wage differences are believed to be affecting labour market conditions in several areas.

This phenomenon is evident in the current situation in West Java, which is experiencing widespread layoffs, whereas Central Java is instead facing difficulties in finding workers.

“The phenomenon currently in West Java is that many layoffs are occurring, while in Central Java, it is actually difficult to find labour,” said Bob Azam, Chairman of Labour Affairs at the Indonesian Employers Association (APINDO), to CNBC Indonesia on Saturday (5/9/2026).

This condition needs to be a focus in the formulation of future labour regulations. He believes that excessively large differences in minimum wages between regions can cause an imbalance in labour distribution and investment. As is known, the highest regional minimum wage (UMK) in West Java for 2026 is Bekasi City at Rp5,999,443, whereas the highest in Central Java is Semarang City at Rp3,701,709.

“This is strange. It turns out the cause is the differing minimum wages. We must consider how to address this in the future so that the disparity does not become even more disproportionate,” he said.

APINDO also believes that Indonesia needs to observe how other countries, particularly within the ASEAN region, determine minimum wage increases. One comparable country is Vietnam. Bob noted that Vietnam recently increased its minimum wage by 7.2%, even though Vietnam’s inflation stands at 3.3% and its economic growth has reached 8%.

“If we look at our neighbour, Vietnam, they recently increased their minimum wage by 7.2% in January, with inflation at 3.3% and economic growth at 8%. If we used our formula, the increase would have been 10%, right? But they only increased it by 7%,” he remarked.

This comparison shows that every country has different formulas and wage policies. Therefore, Indonesia needs to study practices in ASEAN countries so that wage policies can continue to protect workers while maintaining the competitiveness of the business sector.

He also reminded that minimum wage increases do not necessarily have to occur every year. In several countries, minimum wage adjustments are conducted over longer periods.

“And not all countries increase their wages every year. Some do it once every two years,” he said.

In his view, the condition of companies is not uniform. Some companies have the capacity to pay higher wages, while others face economic pressures and cannot be forced to provide the same increases.

“If the situation is good, then why not? Please, let the wages be even better. But if it is not good, do not force it. Because the current economy is like a ‘K-shaped’ curve; some are rising, while others are falling,” he concluded.