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| 2026 Wage Regulation Officially Issued, New Formula Sparks Labor Protests and Business Concerns. [Illustration image] |
The government has officially issued the new wage regulation for 2026. The Government Regulation on wages was signed directly by President Prabowo, marking an important change in how minimum wages will be calculated starting next year.
Minister of Manpower Yassierli explained that the government is introducing a new wage calculation formula. The formula consists of inflation plus the result of economic growth multiplied by an alpha value. The alpha index is set within a range of 0.5 to 0.9, significantly higher than the previous range of 0.1 to 0.3.
According to Yassierli, the alpha value represents the contribution of workers to national economic growth. Through this new formula, the government hopes wage determination will better reflect economic conditions while recognizing the role of labor. Governors are required to set Provincial Minimum Wages, Regency or City Minimum Wages, and Provincial Sectoral Minimum Wages no later than December 24, 2025.
However, the policy has drawn strong reactions from labor unions. President of the All Indonesia Workers Union Association, Mirah Sumirat, expressed her disappointment with the 2026 minimum wage decision. She argued that the new formula does not guarantee a Decent Living Needs standard for workers.
Mirah emphasized that the Constitutional Court has ruled that minimum wages must include principles of decent living, fairness, and humanity. In her view, wage determination should not rely solely on macroeconomic figures.
Similar concerns were voiced by West Java KSPI Chairman Jinto Ferianto. He stated that KSPI plans to hold simultaneous demonstrations in several regions, followed by a protest at the State Palace next week to reject the 2026 wage policy.
From the business community’s perspective, concerns were also raised. Indonesian Chamber of Commerce and Industry Vice Chairman for Regional Autonomy, Sarman Simanjorang, warned that wage discussions should not be driven by street pressure alone. He stressed that wage policies must be based on real economic conditions.
Sarman explained that wage determination is closely linked to many interconnected factors, ranging from global economic challenges to domestic business conditions. According to him, weakening purchasing power and the rising trend of layoffs are serious warning signs that should not be ignored.
With the new regulation now in effect, debate over the 2026 minimum wage is expected to continue. The government, labor groups, and employers are all facing the challenge of finding common ground to balance workers’ welfare with the sustainability of businesses.