2025 Provincial Minimum Wage Increased By Government 6.5 Percent, Expected To Boost Workers' Purchasing Power

President Prabowo Subianto announced an increase in the average provincial minimum wage (UMP) throughout Indonesia by 6.5 percent for 2025. The increase in the UMP is expected to increase the purchasing power of workers while maintaining business competitiveness.

This increase was slightly higher than Yassierli's proposal by the Minister of Manpower, which previously recommended an increase of 6 percent. The decision was taken after a limited meeting that discussed the minimum wage as a social safety net for workers, especially those who worked less than 12 months.

Economist from Indef, Eko Listiyanto, acknowledged that the increase in the 2025 Provincial Minimum Wage (UMP) by 6.5 percent set by the government could help increase the purchasing power of workers which is currently decreasing.

"Currently, people's purchasing power, especially from the labor sector and workers, is decreasing. So if there must be a booster or stimulus, one of which is the UMP," he said, Sunday, December 1, 2024.

He stated, in the context of national growth, the 2025 UMP figure has been averaged by national economic growth. Meanwhile, in terms of inflation in general, the 2025 UMP rate is already above the inflation rate.

Eko emphasized that the amount of the 2025 UMP above the inflation rate has a significant impact on workers' purchasing power. This is because inflation, especially food inflation, is often higher than general inflation which ultimately has an impact on workers' spending.

"This means that the government has at least calculated the inflation rate before determining the amount of the UMP 2025. Therefore, the 6.5 percent figure is what I think can help to the purchasing power of the workers," he explained.