Wage Amount to be Determined by Regional Wage Board

JAKARTA - The government has issued a Government Regulation (PP) regarding the 2026 Provincial Minimum Wage (UMP) which has been signed by President Prabowo Subianto on Tuesday, December 16.

Minister of Manpower, Yassierli, said that the calculation of the minimum wage increase would be carried out by the Regional Wage Council, to be submitted as a recommendation to the governor in each region.

"The Regional Wage Council will conduct a study related to the conditions of each region," Yassierli told the media at the Ministry of Manpower's Office, Wednesday, December 17.

Yassierli added that later the determination of the amount of wages by the Regional Wage Council will be adjusted to the extent of the disparity that currently exists in each region as well as the index of the minimum living standard (KLH).

"Then the Regional Wage Council will propose to the respective regional leaders to be determined by the Governor," continued Yassierli.

He added, by the government, the wage increase formula was set at Inflation + (Economic Growth x Alfa) with an Alfa range of 0.5-0.9.

Later, he continued, the Regional Wage Council will consider the amount of inflation from each region as well as economic growth in each region.

However, Yassierli ensured that there was no reduction in the amount of wages even though there were areas that recorded negative economic growth.

"Inflation is in accordance with the definition written in the PP, Year on Year. Then the second, there is no term that the wages will certainly decrease. Because the formula is Inflation plus Economic Growth multiplied by Alpha. So if the economic growth is negative, then the Regional Wage Council will certainly consider an increase based on inflation. But we leave it to the Regional Wage Council," said Yassierli.

The deadline for the announcement of wages by each governor is December 24, 2025.

Even though it was in a short period of time, Yassierli ensured that he had carried out socialization to regional heads throughout Indonesia and could be announced in a timely manner by each regional head.

The reason is that this new policy has regulated the provision that the governor must determine the Provincial Minimum Wage (UMP) and can determine the District/City Minimum Wage (UMK). In addition, the governor is also required to determine the Provincial Sectoral Minimum Wage (UMSP) and can also determine the District/City Sectoral Minimum Wage (UMSK).

"So it's been more than a month, yes, we've been coordinating, we've been discussing with the Provincial Wage Council. And some of these estimates have also been discussed before," said Yassierli.