Jakarta. The Jakarta Chamber of Commerce and Industry (Kadin Jakarta) says the central government has yet to establish a clear and reliable formula for determining Indonesia’s 2026 provincial minimum wage, leaving regional wage councils unable to set new rates in the absence of formal regulations.

Kadin Jakarta Chairwoman Diana Dewi said the core challenge lies in defining the “decent living needs” indicator, which forms the basis of the current wage-setting model but remains subjective and difficult to quantify.

“If we refer to the decent living needs indicator, the metrics are difficult to determine with certainty. Even the government has not been able to identify the right figures,” Diana said during a dialogue on Beritasatu TV.

Labor Minister Yassierli said last week that the government is drafting a new wage law to replace current legislation after the Constitutional Court ordered the adoption of a wage standard that reflects decent living needs and is fairer for workers.

According to Diana, prolonged disagreement over the “alpha coefficient” -- a variable in the wage formula used to determine the annual adjustment -- has also created recurrent disputes between the government, labor unions, and employers.

“This alpha coefficient never had a clear basis from the start,” she stressed.

Given the sharp differences in economic conditions across regions and sectors, Kadin Jakarta argues that applying a single universal wage formula nationwide is unrealistic.

To resolve the impasse, the chamber is urging the government to adopt a bipartite negotiation scheme, allowing employers and workers in each company to determine wages through direct dialogue. Such a model, Diana said, would deliver fairer outcomes while reflecting each company’s financial capacity and workers’ needs.

“Employers understand their company’s condition, and workers understand their needs. With bipartite negotiations, the outcome can be win-win,” she said.

Diana concluded by urging caution in formulating the new wage model, warning that poorly designed regulations could burden businesses that are already struggling in an economic climate she described as “far from ideal.”

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