Labor Unions Propose 7.5–9.5% Minimum Wage Hike for 2027
The Indonesian Trade Union Confederation (KSPI) and the Labor Party have officially proposed a 2027 minimum wage increase of 7.5 to 9.5 percent. The proposal was announced by KSPI and Labor Party president Said Iqbal in an online press conference on Tuesday (10/13/2026).
"Thus, the labor request, proposal, or suggestion for the 2027 minimum wage increase ranges from 7.5 percent to 9.5 percent. The calculation is clear," said Said Iqbal, adding the figure follows the formula in Government Regulation (PP) No. 49 of 2026 on wages.
Beyond the range itself, KSPI also demands the government set Provincial Minimum Wages (UMP) and Provincial Sectoral Minimum Wages (UMSP) precisely on November 1, 2026, with sectoral wages above the regular minimum in the same region.
The Formula: 3.2% Inflation and a 0.9 Index
Said Iqbal explained the 7.5 to 9.5 percent range is not a number pulled from thin air. KSPI's calculation uses year-on-year data for October 2025 to September 2026: national average inflation of 3.20 percent and average economic growth of 5.43 percent, with a specific index of 0.9 — the upper bound in the wage formula. The result puts the potential national average increase at around 7.8 percent.
Said stressed the increase cannot be uniform across regions since every province and district has different inflation and growth levels.
Rolling Protests in 38 Provinces, October 15–30
To back the demand, KSPI and the Labor Party plan rolling demonstrations in 38 provinces from October 15 to 30, 2026, targeting regional government offices to monitor local wage formulations and ensure sectoral wage recommendations from regents and mayors are respected.
"Workers will fight. There will be actions this October, roughly from October 15 to October 30, with rolling protests in the regions," said Said Iqbal. The protests also push demands on outsourcing limits and severance changes under the newly passed Employment Protection Law.
For comparison, Malaysia has set a minimum wage increase of 17.6 percent for June 2027 — well above the range Indonesian unions are asking for.
Employers Push Back, Cite Productivity
The proposal drew an immediate response from business. APINDO, through labor affairs chairman Bob Azam, insisted a 9.5 percent minimum wage increase must be matched by productivity gains — Indonesian labor productivity is estimated at only 3 to 4 percent.
Said Iqbal dismissed claims that higher wages automatically trigger mass layoffs. "Minimum wages rise alongside productivity gains and lower overhead costs," he stressed, citing KSPI records showing the most factory closures in low-wage regions, where export demand fell.
According to Said, pressure on labor-intensive industries comes more from other factors: falling international market demand, rising raw material and industrial gas costs, and high logistics expenses. Export-oriented textile, garment, and footwear industries have been hit hardest by the slowing global market.
