Jakarta, hitclubapk3 Indonesia
—
Indonesian Employers Association (
Apindo
) worried about the determination of the Provincial Minimum Wage formula (
UMP
) 2026 in the latest Government Regulation (PP) which has been signed by President Prabowo Subianto creates new problems, including Termination of Employment Relations (
Layoffs
).
Especially, related to the Alpha quantity which will be the basis for the calculation.In the latest PP, the Alpha range is set at 0.5 – 0.9.This is different from this year in the range of 0.1 to 0.3 points.
General Chairperson of Apindo Shinta Kamdani said that in a tripartite forum with the National Wage Council, her party proposed that the alpha value be in the range of 0.1-0.5.Where, this range is calculated taking into account data in the field and real conditions in the business world.
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However, with a higher alpha decision than Apindo’s proposal, like it or not, entrepreneurs will still follow it.However, he asked that wage policies be carried out carefully looking at the conditions of each company.
“We note and hope that policy implementation at the regional level can be carried out wisely and moderately, while still considering the balance between labor productivity growth, regional economic conditions, disparities between regions, and local employment dynamics,” he said to
hitclubapk3Indonesia.com,
Thursday (18/12).
According to Shinta, if wage determination is not in sync with productivity growth, risks such as layoffs could arise.Because, even though labor productivity shows an increasing trend, the growth rate is still lagging behind the increase in the UMP.
In Apindo’s records in the last five years, labor productivity was recorded to have only grown in the range of 1.5-2 percent per year.Meanwhile, the minimum wage increase is in the range of 6.5-10 percent per year.
“We view that the risk of layoffs needs to be well anticipated, especially in labor-intensive sectors which are still in the recovery phase and facing multiple pressures,” he said.
On the other hand, Apindo’s Head of Employment, Bob Azam, also said that the alpha set by the government was far above employers’ expectations.
“It is beyond Apindo’s expectations that Alfa 0.5 is actually the maximum limit, but in PP it is actually the minimum,” he said.
He is concerned that an increase in the 2026 UMP formula could lead not only to layoffs, but also to increasingly expensive prices of goods.
“What will happen to our industry in the future? Because our productivity is growing 1.5-2 percent, wage increases that cannot be absorbed will be transferred to increases in goods prices and labor efficiency,” he concluded.
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(ldy/pta)
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