The 2027 Provincial Minimum Wage is beginning to draw attention ahead of its scheduled determination. The Confederation of Indonesian Trade Unions has proposed a minimum wage increase of between 7.5% and 9.5% for both Provincial Minimum Wages and Regency/City Minimum Wages.
The proposal takes into account differences in economic conditions across regions, particularly inflation and economic growth.
Said Iqbal, President of the Confederation of Indonesian Trade Unions, said the proposal would be pursued through the Wage Council and other constitutional channels.
“The Confederation of Indonesian Trade Unions and the Labor Party propose that the 2027 minimum wage increase, both for Provincial Minimum Wages and Regency/City Minimum Wages, be set within a range of 7.5% to 9.5%. We will fight for this figure through the Wage Council and various constitutional channels,” Said Iqbal said in Jakarta on Sept. 16, 2026.
However, it should be emphasized that these figures do not represent the official 2027 minimum wage, as no final decision has yet been made by the government.
Basis for the 2027 Minimum Wage Calculation
The Confederation of Indonesian Trade Unions used three components in calculating the proposed increase: the national average inflation rate, the national average economic growth rate, and a specific index.
For the specific index, the Unions applied a figure of 0.9, which falls within the range of 0.5 to 0.9 stipulated under Government Regulation No. 49 of 2026.
Based on data from Statistics Indonesia covering the period from October 2025 to August 2026, which was used by the Unions, the national average inflation rate stood at 3.20%, while average economic growth reached 5.43%.
Using the specific index of 0.9, the Unions arrived at a simulated national average wage increase of approximately 7.7%.
The figure subsequently became the basis for the Unions’s proposed increase range of 7.5% to 9.5%.
The lower end of the range is intended to accommodate regions with economic growth below the national average, while the upper end takes into account regions experiencing stronger economic expansion.
Meanwhile, Yassierli, Minister of Manpower, said the formula for determining the 2027 minimum wage is still awaiting a new legal framework. The government will look to the proposed Employment Protection Bill as one of the foundations for the calculation.
“The formula will depend on the provisions ultimately set out in the Employment Protection Bill. That will serve as the basis, and from there we will assess the implications for existing regulations,” Minister Yassierli said.
The government and the House of Representatives are still gathering input from various stakeholders as discussions on the bill continue, with deliberations targeted for completion in October 2026.
“For now, our focus is on the Employment Protection Bill. Any input from stakeholders, whether from labor groups or industry representatives, will be taken into consideration,” Yassierli said.
The government is scheduled to announce the 2027 Provincial Minimum Wage on Nov. 1, 2026. This will be followed by the determination of Regency/City Minimum Wages and sectoral minimum wages on Nov. 10, 2026.
