Jakarta. The Association of Indonesian Employers (Apindo) has voiced opposition to the 6.5 percent hike in the 2025 minimum wage, warning that the policy could hinder business expansion and lead to widespread layoffs.

Apindo has urged the government to reconsider the decision, which was recently announced by President Prabowo Subianto, underlining the need to evaluate businesses' capacity to absorb the increase.

“If businesses cannot afford the wage hike, they will make rational decisions such as delaying new investments, scaling back business expansion, or implementing extreme efficiency measures, including mass layoffs. In certain industries, this policy could even lead to the collapse of many companies,” Bob Azam, head of Apindo’s manpower division, said in a recent press statement.

Bob criticized what he described as the government’s “unilateral decision,” noting that Apindo had previously been actively involved in tripartite discussions on minimum wage increases alongside the government and labor unions.

An inclusive discussion, he argued, would have allowed Apindo to present data-driven analyses on the competitiveness of Indonesian businesses and the productivity levels of workers.

“It seems that the input from businesses, as key players in economic activities, was not seriously considered during the decision-making process,” Bob said.

Apindo Chairwoman Shinta Widjaja Kamdani echoed these concerns, saying that the organization is awaiting a comprehensive explanation from the government regarding the rationale behind the minimum wage hike.

“The government owes us clarity on how the 2025 minimum wage was calculated before we can respond to what we see as continued inconsistencies in wage policymaking,” Shinta said.

She warned that labor-intensive industries would bear the brunt of the wage increase, potentially resulting in mass layoffs, fewer new job opportunities, and diminished competitiveness in global markets.