Jakarta’s minimum wage bump disappoints labourers

JAKARTA - Labourers have voiced their dissatisfaction with Jakarta’s minimum wage increase in 2026, saying it still falls short of meeting living standards amid rising cost of living in the capital.

Jakarta Governor Pramono Anung announced on Dec 24 that the 2026 provincial minimum wage was set at 5.73 million rupiah (S$439), 6.17 per cent higher than the 2025 figure, following negotiations with representatives from labourers and employers.

The new wage is effective starting Jan 1, 2026, revising the 2025 minimum wage of 5.39 million rupiah. But one of the biggest labour groups, the Confederation of Indonesian Trade Unions (KSPI), has rejected the new minimum wage for failing to meet the basic cost of living set by the Manpower Ministry, which stands at 5.89 million rupiah.

While Jakarta has the highest basic living expenses in the country, its minimum wage is below that of its neighbouring cities of Bekasi and Karawang in West Java.

KSPI chairman Said Iqbal, who also chairs the Labour Party, said in a statement on Dec 27 that the new minimum wage would make labourers working in Jakarta more vulnerable to poverty, considering that the living cost in the capital has been surging.

“If we use the standard cost of living (in Jakarta) of 5.89 million rupiah as a benchmark, then the new minimum wage in the city, which amounts to 5.73 million rupiah, is still 160,000 rupiah short… the governor has failed to accommodate us,” he said.

The KSPI plans to stage a two-day protest in front of the State Palace on Dec 29 and Dec 30, demanding a revision to the minimum wage to at least meet the threshold of basic living expenses.

Mr Chico Hakim, a special staffer to the governor, said the Jakarta administration was well aware of the dissatisfaction coming from labour groups and that the city would strengthen its subsidy and incentive programmes for labourers, particularly those related to public transportation, food and health services.

“(But) for now, the new minimum wage remains in effect for the sake of regional economic stability,” Mr Chico told The Jakarta Post on Dec 28.

The new number was based on the Government Regulation 49/2025 on wages, which was signed on Dec 16 by President Prabowo Subianto and sets a revised formula for minimum wage increases and instructs provincial leaders to determine them by Dec 24.

The formula takes into account inflation and economic growth multiplied by a factor known as alpha, which represents an index reflecting labour’s contribution to the growth. The regulation stipulates the 2026 coefficient to be between 0.5 and 0.9.

Mr Pramono said on Dec 24 that the negotiations on the minimum wage had been contentious, with employers initially proposing an alpha of 0.5, while workers pushed for 0.9.

At the negotiations, they reached a consensus of 0.75 alpha coefficient.

He said the new minimum wage reflected support for workers, while also considering challenges faced by business owners and the sustainability of the economy that would create new jobs.

Center of Economic and Law Studies executive director Bhima Yudhistira said on Dec 28 that the minimum wage should have been set equal to or above the basic living expenses in a bid to boost household spending.

“It’s only natural for labourers to reject (the new minimum wage) since it’s currently lower than the basic cost of living,” he added. THE JAKARTA POST/ASIA NEWS NETWORK