Textile Entrepreneurs Find Proposed 9.5% Minimum Wage Increase for 2027 Reasonable
The Indonesian Filament and Yarn Producers Association (APSy and APSyFI) considers the proposed 2027 minimum wage increase of 7.5% to 9.5%, submitted by labour unions, to be quite reasonable. One reason is that a wage increase is needed to stimulate public purchasing power, which is currently viewed as a challenge for the domestic industry.
APSyFI Chairman Redma Gita Wiraswasta stated that while wage increases must remain aligned with industrial capacity, the pressure on public purchasing power cannot be ignored as it directly affects industrial performance. “In my view, the range of increase presented by Mr Said Iqbal is very reasonable, as a society facing 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 increase,” Redma told CNBC Indonesia.
According to Redma, strengthening purchasing power should be part of the strategy to drive the domestic market. He believes Indonesia needs to move away from an economic model that relies on cheap labour. “I think we should have moved away from the low-wage regime towards a focus on domestic market mastery and cutting ‘hidden costs’ occurring in the field, such as illegal levies, bribes to certain bureaucrats, the complexity of licensing, extortion by thugs and certain NGOs, payments to certain officials, and other hidden costs,” he said.
Redma believes that industrial efficiency should not be achieved solely by suppressing labour costs. He noted that there are various other costs outside of wages that burden businesses and erode industrial competitiveness. When asked about the proposed 7.5%-9’5% increase, Redma deemed the range ideal. “I think it is ideal, although it will certainly be opposed by many parties from entrepreneurs’ associations, as they are accustomed to the low-wage regime. But if our economy wants to grow healthily, we must start leaving the old pattern and running businesses clean of hidden costs,” he added.
Previously, the Confederation of Indonesian Trade Unions (KSPI) and the Labour Party proposed a minimum wage increase for 2027 of 7.5% to 9.5%. This proposal applies to both Provincial Minimum Wage (UMP) and Regency/City Minimum Wage (UMK).
KSPI President Said Iqbal stated that the proposal uses three components: the national average inflation rate, the national average economic growth rate, 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.
Based on data from 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%. By incorporating the 0.9 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.
Said also emphasised that wage increases must be viewed through the lens of purchasing power. He argued that a nominal wage increase is meaningless if the price of basic necessities rises even higher. “It is useless if the nominal wage rises but the amount of goods that can be purchased actually decreases. For example, if previously 1 million Rupiah could buy five items, but after the wage rises to 1.5 million Rupiah, 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.