President Prabowo Subianto has signed a government regulation on the minimum wage increase for 2026, featuring a new formula of inflation plus economic growth multiplied by an alpha range of 0.5-0.9. This policy updates the alpha range from the previous regulation and fulfills a commitment to a Constitutional Court ruling. Governors are urged to set the increase amounts by December 24, 2025.
On Tuesday, December 16, 2025, President Prabowo Subianto signed a Government Regulation (PP) on minimum wage increases, establishing a new formula: inflation + (economic growth x alpha), with an alpha range of 0.5-0.9 points. This amends PP Number 51 of 2023, where the previous alpha range was only 0.1-0.3 points.
Minister of Manpower Yassierli stated, "Alhamdulillah, the wage regulation PP has been signed by President Prabowo Subianto on Tuesday (16/12/2025)." He hopes the policy will be the best for all parties and urges governors to set Provincial Minimum Wage (UMP), Regency/City Minimum Wage (UMK), Provincial Sectoral Minimum Wage (UMSP), and Regency/City Sectoral Minimum Wage (UMSK) by December 24, 2025 at the latest.
This policy fulfills the commitment to Constitutional Court (MK) Decision Number 168/2023, which directs lawmakers to create a new Labor Law separate from Law Number 6 of 2023 on Job Creation, within a maximum of two years, involving active participation from labor unions and workers.
The PP drafting process involved extensive studies, reported to the president. Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Anindya Novyan Bakrie emphasized balancing worker welfare and business sustainability. "The most important thing is to sit together so that relations with workers are good, our workers are good. But the business world also continues to develop and be competitive," he said. He highlighted the government's role in ensuring policies support a healthy business climate while protecting workers.
