Jakarta. The Indonesian Employers Association (Apindo) has warned that a roughly 6 percent increase in the 2026 minimum wage in Tangerang, Banten — home to major textile and footwear manufacturers — could trigger mass layoffs and factory relocations, adding pressure to labor-intensive industries already grappling with rising costs and weakening global demand.

Apindo said the newly set city and regency minimum wage for Tangerang, fixed at Rp 5,210,377 ($310) per month — up 6.31 percent from 2025 — would significantly raise labor costs and strain companies’ ability to absorb higher expenses.

“If the 6.31 percent increase is maintained, mass layoffs are not out of the question as companies pursue efficiency amid very high wage costs,” said Herry Rumawatine, chairman of Apindo’s Tangerang chapter, on Wednesday.

Herry said the higher wage floor could also accelerate manufacturers’ plans to relocate production to regions with lower labor costs, particularly West Java and Central Java, where minimum wages remain below Tangerang’s level.

“There is a real possibility that many labor-intensive industries will move to other regions,” he said. “This would weaken Tangerang’s competitiveness as a manufacturing base.”

Apindo has formally filed an objection to the wage hike, which was set by the Banten governor on Dec. 24, 2025, urging the provincial government to review the policy and better align it with business capacity.

The association is proposing a smaller increase of 4.81 percent, which would set the 2026 minimum wage at Rp 5,136,861 per month, Herry said.

Labor unions, however, argue that the increase still falls short of providing a decent living standard for workers, particularly those supporting families.

Ahmad Supriadi, chairman of the Tangerang branch of the All Indonesia Workers Union Confederation (KSPSI), said the current minimum wage does not fully meet the region’s “decent living needs” benchmark.

“If the indicator is a single worker, the 2026 minimum wage may be close to adequate,” Ahmad said. “But in reality, many workers have families, and their wages still do not meet decent living standards.”

He urged companies not to use the new wage level as justification for layoffs, adding that many firms failed to fully comply with minimum wage rules in 2025 by relying on contract and internship arrangements that paid below the UMK.

“We hope companies will comply in 2026 and not use the minimum wage as an excuse for mass layoffs,” Ahmad said.

The debate comes as layoffs in Tangerang have surged. According to the local manpower office, 9,766 workers were laid off in 2025, a 93 percent increase from 5,058 in 2024.

Hendra, head of industrial relations at the Tangerang Manpower Office, said most layoffs were driven by efficiency measures. About 7,007 workers lost their jobs due to cost-cutting, while 919 were dismissed for disciplinary reasons, 864 following company closures, 420 resigned voluntarily and 311 were affected by corporate restructuring.

In October last year, about 1,800 workers at Victory Chingluh Indonesia, a shoe manufacturer based in Tangerang, were laid off following a wave of export product returns due to quality issues. The company produces footwear for global sportswear brand Nike and is among the region’s largest employers.