Said Iqbal Proposes 7.5%-9.5% Minimum Wage Increase for 2027, Here is the Calculation
The Indonesian Confederation of Trade Unions (KSPI) and the Labour Party have proposed a minimum wage increase of 7.5% to 9.5% for the year 2027. This proposal applies to both Provincial Minimum Wages (UMP) and Regency/City Minimum Wages (UMK), taking into account the differences in inflation and economic growth across various regions.
This was stated by the President of KSPI and President of the Labour Party, Said Iqbal. According to Said Iqbal, the proposal needs to be submitted early because the 2027 UMP is scheduled to be determined on 1 November 2026, while the UMK and sectoral minimum wages are scheduled for 10 November 2026.
“KSPI and the Labour Party propose that the 2027 minimum wage increase, for both UMP and UMK, falls within the range of 7.5% to 9.5%. We will fight for this figure within the Wage Council and through various constitutional channels,” said Said Iqbal.
Said Iqbal explained that there are three main components used by KSPI and the Labour Party to calculate the proposed 2027 minimum wage increase: the annual national average inflation, the national average economic growth, and a specific index. For the specific index, KSPI uses a figure of 0.9, in accordance with the range provided in Government Regulation Number 49 of 2026, which is between 0.5 and 0.9.
“In proposing the minimum wage and sectoral minimum wage for 2027, KSPI uses the national average inflation, the national average economic growth, and a specific index of 0.9. The government regulation provides a range of 0.5 to 0.9, so using the figure of 0.9 has a basis,” Said Iqbal asserted.
The data used covers the period from October 2025 to September 2026. However, as the September 2026 data has not yet been published by the Central Bureau of Statistics (BPS), the preliminary calculation uses the latest available data up to August 2026.
According to Said Iqbal, based on official BPS data collected for the period of October 2025 to August 2026, the national average inflation stands at 3.20%, while the national average economic growth is at 5.43%.
“Even when the September data is released, we estimate the figure will not differ significantly. Therefore, for now, we are using a national average inflation of 3.20% and national economic growth of 5.43%,” he said.
By incorporating a specific index of 0.9 into the calculation method used by KSPI, a national average increase of approximately 7.7% is obtained. This figure serves as one of the bases for determining the lower limit of the proposed minimum wage increase at 7.5%.
“On a national average, the calculation results in approximately 7.7%. However, because some regions have economic growth lower than the national average, we have adjusted our proposed lower limit to 7.5%,” he explained.
Said Iqbal emphasised that the economic conditions of every province and regency/city differ. Inflation and economic growth in West Java, for example, are not the same as in North Maluku. Similarly, the economic conditions in Bekasi Regency are not the same as in Gresik Regency. Therefore, KSPI is not proposing a single figure, but rather an increase range of 7.5% to 9.5%.
Rising Basic Food Prices Eroding Real Wages
Responding to the rising prices of basic necessities, Said Iqbal ensured that labourers will also voice opposition to uncontrolled price increases. He noted that the rising cost of basic food items directly impacts workers’ purchasing power.
He emphasised that what workers need is not merely an increase in nominal wages, but an increase in real wages.
“It is useless if nominal wages rise if the amount of goods that can be purchased actually decreases. For example, previously, a wage of Rp1 million could buy five items. After the wage rises to Rp1.5 million, it can only buy three items because prices have surged. Nominally, the wage has increased, but purchasing power and real wages have actually declined,” explained Said Iqbal.
In economics, real wages are calculated by comparing nominal wages with the consumer price index or inflation rate. Therefore, the struggle for wage increases must go hand in hand with the control of basic commodity prices.
“Labourers will certainly fight for the control of basic commodity prices. What workers need is an increase in real wages, not just an increase in nominal figures that are subsequently depleted by inflation,” concluded Said Iqbal.