Said Iqbal Suddenly Proposes 7.5%-9.5% Minimum Wage Increase for 2027
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 presented early because the 202ng 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, be in 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 (year-on-year), 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, national average economic growth, and a specific index of 0.9. The government regulation provides a range of 0.5 to 0.9, so the use 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 of 7.5%.
“On a national average, the calculation results in approximately 7.7%. However, because some regions have lower economic growth 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%.
Wage Disparities Must Be Reduced
Addressing the issue of wage gaps or disparities between regions, Said Iqbal explained that there are generally two methods for determining minimum wages globally. First, the Living Wage (KHL) survey method. Second, a method based on macroeconomic indicators such as inflation, economic growth, and a specific index.
Furthermore, there are two models of wage setting. The first model is a single wage, which is a single minimum wage value applicable nationally, as implemented in countries such as Brazil and Germany. The second model is regional minimum wage, which is applied in Indonesia and several ASEAN countries.
Since Indonesia uses a regional system, differences in wages between provinces and regencies/cities cannot be entirely avoided.
“The UMP in Jakarta differs from West Java, Maluku, or Papua. Even the UMK between regencies/cities within one province differs. As long as we use a regional model, wage disparity will inevitably occur,” said Said Iqbal.
He cited changes in minimum wages in Bekasi and Karawang as an example. Previously, the minimum wage in Bekasi was lower than in Jakarta. However, after many industries developed and moved to Bekasi, the minimum wage value increased, even surpassing Jakarta. A similar situation occurred in Karawang after it developed into an automotive industry hub.
To reduce disparity, Said Iqbal proposed the use of a zoning system or industrial area rings. In the past, industrial areas with similar economic characteristics and living needs were placed within one ring with the same or similar minimum wage values.
“Ring one in West Java could include Bekasi, Karawang, Bogor, Depok, and even connect with Jakarta. In East Java, ring one could include Mojokerto, Sidoarjo, Gresik, and Surabaya. With a ring system, disparities between industrial areas can be minimised,” he explained.
Industrial development factors also influence wage increases. Regions that develop into new industrial areas will eventually experience changes in wage levels through economic mechanisms. However, the nature of the industry also plays a role. Labour-intensive industries tend to maintain lower wages, whereas capital-intensive industries generally drive increases in productivity and wages.
He cited regions such as Batang and Pekalongan, which are developing many labour-intensive industries, as well as Subang and Purwakarta, where minimum wages are beginning to rise alongside industrial development.
Rising Food Prices Erode Real Wages
Responding to the rising prices of basic necessities, Said Iqbal ensured that labourers will also voice opposition against uncontrolled price increases. According to him, the rise in the price of basic food items will directly hit the purchasing power of workers.