Surprising! Businessmen Say Said Iqbal's Proposal for 9.5% Minimum Wage Increase for 2027 is Ideal
Jakarta, CNBC Indonesia - The Indonesian Association of Filament Yarn and Thread Producers (APSyFI) considers the proposed 2027 minimum wage increase of 7.5%–9.5% by labour unions to be quite reasonable. Textile entrepreneurs believe that increasing public purchasing power is necessary to support the performance of the domestic industry.
APSyFI General Chairman Redma Gita Wiraswasta stated that while wage increases must still consider industrial capacity, current pressures on public purchasing power are actually a factor hindering domestic industrial performance.
“In my opinion, the range of wage increases presented by Mr Said Iqbal is very reasonable, as a society experiencing purchasing power pressure also acts as a hindrance to domestic industrial performance. However, on the other hand, we must still calculate the industry’s ability to implement this wage increase,” Redma told CNBC Indonesia.
Redma even assessed that Indonesia needs to begin moving away from an economic pattern that relies on low wages. He believes that strengthening the domestic market should be a priority, including by cutting various costs that have long burdened the business world.
“I think we should have moved away from the low-wage regime towards a territory of domestic market mastery and cut the ‘phantom costs’ occurring in the field, such as extortion, bribes to certain bureaucracy members, the complexity and costs of licensing, extortion by thugs and NGOs, payments to certain officials, and other hidden costs,” he said.
According to Redlar, industrial efficiency should not solely be sought through the suppression of labour costs. The business world also needs to look at other costs outside of wages that can erode industrial competitiveness.
When asked whether the 7.5%–9.5% increase proposed by the labour unions is ideal, Redma affirmed that the figure is indeed ideal.
“In my opinion, it is ideal, although it will certainly be opposed by many parties from business associations, as they are accustomed to being in a low-wage regime. But if we want our economy to grow healthily, we must start leaving the old pattern and start running businesses free from phantom costs,” he said.
He reiterated several costs outside of wage components that he believes need to be addressed so that industry can grow more healthily, specifically mentioning extortion and payments to certain officials.
Labour Proposes 7.5%–9.5% Increase
Previously, the Confederation of Indonesian Trade Unions (KSPI) and the Labour Party proposed a minimum wage increase for 2027 of 7.5%–9.5%. This proposal applies to both Provincial Minimum Wage (UMP) and Regency/City Minimum Wage (UMK).
KSPI President and Labour Party President Said Iqbal stated that the proposal uses three components: the national average inflation, the national average economic growth, and a specific index of 0.9.
This specific index falls within the 0.5–0.9 range used in Government Regulation Number 49 of 2026. KSPI chose the 0.9 figure for its calculation.
“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 the use of 0.9 has a basis,” Said Iqbal asserted.
Based on data from the period of October 2025 to August 2026 collected by KSPI from official BPS (Statistics Indonesia) data, the national average inflation reached 3.20%, while the national average economic growth stood at 5.43%.
“Even when the September data is released, we expect the figures will not differ significantly. Therefore, for now, we are using a national average inflation of 3.20% and economic growth of 5.43%,” he said.
By incorporating the 0.9 specific index, the KSPI calculation results in a national average increase of approximately 7.7%. However, KSPI set the lower limit of the proposal at 7.5% to account for regions with lower economic growth.
“On a national average, the calculation results in a figure of about 7.7%. But because there are regions where economic growth is lower than the national figure, we have adjusted our proposed lower limit to 7.5%,” he explained.
Said emphasised that wage increases must also be viewed from the perspective of purchasing power. He noted that a nominal wage increase would be meaningless if the price of basic necessities increases even more.
“It is useless if the nominal wage rises 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 increases, but purchasing power and real wages actually decline,” explained Said Iqbal.
He further emphasised that workers require both a real wage increase and the control of basic commodity prices.
“Labour will certainly fight for the control of basic necessity prices. What workers need is a real wage increase, not just a nominal increase that is subsequently wiped out by inflation,” concluded Said Iqbal.