Businesses Prefer to Negotiate with Workers on Wage Hikes Themselves
Jakarta. Businesses are hoping for the government to let them negotiate the minimum wage with their employees on their own rather than follow a government-set formula.
The government is responsible for setting the provincial minimum wage, which companies are mandated to follow. Labor has demanded an 8.5 percent to 10 percent hike in the threshold for 2026. This marks a major jump compared to the 6.5 percent increase this year. Indonesia is expected to announce the 2026 provincial minimum wage in less than 24 hours from now.
Despite the nearing deadline, Apindo once again pitched the idea of a “bipartite dialogue” which sees the management and workers of the same company sitting together to find a win-win solution. According to the association, people within the company would be more knowledgeable of the internal financial situation, thereby allowing them to set a figure that doesn't take a toll on business while keeping workers happy.
"It's not that we are against wage hikes, but it should be something that takes place in a bipartite dialogue at each company, not via a minimum wage mechanism,” Bob Azam, the head of employment affairs at Apindo, said in a talk show on Beritasatu TV on Thursday.
“We can’t force companies to follow a minimum wage threshold. Some companies might be doing great right now, but others might be struggling. … The ones who know it best are the workers' representatives and employers. It’s not the government, the federation of trade unions, or even Apindo.”
Bob acknowledged that a significant wage increase could trigger layoffs. At least 50 percent of companies in a recent Apindo survey admitted to have cut their workforce. Businesses might even have to lay off more people “if the situation does not improve”, Bob warned. The businessman also highlighted how some workers out there were still earning less than the provincial minimum wage.
“Just take a look at Apindo. We have 13,000 members, but 90 percent of them are small enterprises like restaurants. They are even struggling to meet the 2025 minimum threshold,” Bob said.
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