Provincial Minimum Wage Increases Significantly, Becomes New Benchmark to Boost Worker Welfare at the Start of the Year
Jakarta – Coordinating Minister for Economic Affairs Airlangga Hartarto reiterated the government’s commitment to maintaining a balance between protecting worker welfare and business sustainability by establishing the 2026 Provincial Minimum Wage (UMP).
This policy was formulated in response to national and regional economic dynamics, while also ensuring workers’ purchasing power remains strong at the start of the year.
Airlangga stated that the determination of the 2026 UMP went through a thorough and comprehensive process to improve worker welfare while maintaining economic stability.
“This serves as a benchmark to ensure workers receive wages that meet their needs and keep pace with price increases,” he said.
Furthermore, Airlangga explained that the government has made adjustments to the components determining the minimum wage increase.
One of these adjustments is by increasing the alpha index to a range of 0.5 percent to 0.9 percent. This step was taken to anticipate potential inflation and ensure workers’ purchasing power remains strong amidst global economic uncertainty.
With this formulation, the government believes the 2026 UMP is sufficient to serve as a reference for meeting daily living needs. Airlangga emphasized that the UMP is a minimum standard, not a maximum wage limit.
The business world is expected to encourage a productivity-based wage system to align with company performance.
“This is the minimum standard. We hope the business world can encourage productivity-based wages, so that they align with company performance,” he said.
At the regional level, the process of determining the 2026 UMP is ongoing, and most local governments have announced their amounts. One example is the DKI Jakarta Province, which set the 2026 UMP at IDR 5,729,876, an increase of IDR 333,115 compared to the 2025 UMP of IDR 5,396,761 per month.
Jakarta Governor Pramono Anung stated that the decision was made after extensive discussions with the Wage Council, which involved workers, employers, and local government representatives.
He considered the increase an adaptive measure to meet the living needs of the capital’s residents without hampering the investment climate.
The Deputy Speaker of the Central Kalimantan Regional People’s Representative Council (DPRD), H. Junaidi, welcomed the establishment of the 2026 Provincial Minimum Wage (UMP).
“We all hope that this new UMP will have a positive impact on the welfare of the people of Central Kalimantan, especially for workers with minimum wages,” said Junaidi.
According to Junaidi, the increase will not only increase workers’ incomes but also has the potential to boost people’s purchasing power and stimulate the regional economy.
“This can certainly stimulate local economic growth,” he emphasized.
This policy is expected to foster optimism within the community, create a fairer work climate, and support inclusive and sustainable economic growth in various regions.
