Jakarta. The Indonesian Employers Association (Apindo) is urging the government to immediately decide on a predictable and transparent formula for determining provincial minimum wages for next year, warning that uncertainty could undermine business planning and investment.

Apindo Chairwoman Shinta Kamdani said on Tuesday that companies need clarity and predictability in annual wage adjustments in order to accurately plan operating costs. She recalled that last year’s announcement of new minimum wages without a clear calculation formula -- only final figures -- created uncertainty that harmed the business sector.

“Our expectation is that we will not see a repeat of last year, when there was no formula and only a number was announced. This year, we hope we return to a clear formula,” Shinta said in Jakarta.

She noted that the wage-setting mechanism under Government Regulation No. 51/2023 incorporates macroeconomic indicators such as economic growth, inflation, labor productivity, and regional living costs -- components she argued provide a more objective and industry-aligned foundation.

She also urged the urgency of using credible data, including official figures from the Central Statistics Agency (BPS), so that wage policy reflects actual economic conditions and remains fair to both employers and workers.

The National Wage Council, which includes employer representatives, has submitted its recommendations, and Apindo is now waiting to see how the government incorporates them into formal policy.

“Our main goal is job creation, so we need a fair system for both employers and workers,” she said.

From a macroeconomic perspective, Shinta argued that a predictable wage formula also sends a strong signal to investors, who require visibility regarding labor-cost escalation before committing capital to expansion in Indonesia.

“Wages are crucial for providing certainty to businesses. Investors always want clarity regarding the scale of future wage increases,” she said.

Beyond maintaining investment momentum, Shinta warned that inconsistency in wage formulas could weaken formal job absorption. With more than half of Indonesia’s workforce employed in the informal sector, she cautioned that wage increases that do not reflect real business conditions may widen the divide.

“This wage policy is crucial for long-term certainty,” Shinta said.

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