JAKARTA - The General Chair of the Indonesian Employers Association (Apindo) Shinta Kamdani reminded of the risk of increasing layoffs as an impact of the 2026 Provincial Minimum Wage (UMP) determination.
He assessed that the range of Alfa values set by the government, namely between 0.5 and 0.9, was too high and potentially burdensome.
"What we are concerned about is that it is crowded, because they will be very stressed by the extension of UMP like this, because the minimum is 0.5, the Alfa, it is quite high, not to mention we are talking about sectoral wages," he told the media, Friday, December 19.
Based on the Government Regulation (PP) concerning Wages, the increase in UMP 2026 is calculated using the inflation formula plus the result of multiplying economic growth with the value of Alfa.
The government sets the range of Alfa between 0.5 and 0.9, which is left to the regional government as an indicator of the contribution of labor to economic growth.
Shinta said that the business world had provided data-based input to the government through the National Wage Council and in that opportunity, business actors proposed that the value of Alfa be in the range of 0.1 to a maximum of 0.5 in order to maintain a balance between the need for a decent living and the actual ability of the company.
However, Shinta stated that her party was still waiting for a decision from the local government and hoped that the Regional Wage Council could really consider the conditions and durability of the business world before setting policies.
"Now it is handed over to the regions, so now we are all from the regions, the Regional Wage Council that must really work to be able to monitor each other, don't let it interfere, yes that was just that we don't want the end to it, don't let it happen if the company has no ability, then how?" he explained.
Shinta emphasized that the too high increase in UMP 2026 has the potential to trigger a wave of layoffs, especially in labor-intensive sectors that are currently still facing business slowdowns.
"We have to see that there should be no more employee reductions because this will disrupt employment. This is one of our concerns," he said.
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