The President of the Republic of Indonesia, Prabowo Subianto, decided to increase the minimum wage for the year 2025 by 6.5%.
This decision, which exceeds the initial proposal of 6% from the Minister of Manpower, was revealed during a press conference at the Presidential Office in Jakarta on Friday, the 29th of November.
“The Minister of Manpower proposed a minimum wage increase of 6%. However, after discussing and holding a meeting with labour leaders, we announced to increase the average national minimum wage by 6.5%,” said Subianto.
With the average national minimum wage in 2024 set at Rp3,113,359, this increase will also affect the Provincial Minimum Wage (UMP). For instance, Jakarta’s 2025 UMP is projected to rise by approximately Rp329,380 – from Rp5,067,381 in 2024 to around Rp5,396,761 in the following year, possibly making it one of the highest UMPs in Indonesia. However, this remains a preliminary estimate, as the final determination of UMPs will be made by governors after considering various inputs.
The General Chairperson of the Indonesian Chamber of Commerce and Industry, Anindya Bakrie, expressed support for this decision while urging employers to avoid laying off employees in response to the wage increase.
“Of course that from us, the Indonesian Chamber of Commerce and Industry, we want to try to appeal to the [companies] to do everything possible so that there are no layoffs,” said Bakrie following the 2024 National Leadership Meeting in Jakarta on Sunday, the 1st of December.
Bakrie also underscored that layoffs would only increase the number of individuals losing income, thereby worsening economic conditions, and should be a last resort. He expressed hope that companies would adopt innovative measures to mitigate the negative effects of the UMP increase.
On the other hand, the President of the Association of All Indonesian Workers Unions, Mirah Sumirat, criticised the 6.5% increase as insufficient to address the community’s declining purchasing power. She proposed a 20% rise in the UMP, coupled with a simultaneous reduction in the prices of nine essential goods (sembilan bahan pokok or sembako).
“The 20% figure is to increase the people’s purchasing power which has been weak or has decreased since 2020-2024 due to one of the impacts of the low wages that have been in effect so far,” Sumirat remarked.