ABSTRACT
This article discusses the latest minimum wage regulations in Indonesia, especially after the issuance of the Minister of Manpower Regulation Number 16 of 2024, which sets a 6.5% increase in the national minimum wage in 2025. This policy is a follow-up to the Constitutional Court Decision No. 168/PUU-XXI/2023, which emphasizes the importance of calculating wages based on decent living needs and the contribution of workers to economic growth. This article outlines the differences between UMP (Provincial Minimum Wage), UMK (District Minimum Wage), and UMS (Sectoral Minimum Wage), as well as how each is determined based on economic conditions and the recommendations of the wage council. The application example in DKI Jakarta shows that the increase in UMP and UMS follows the official formula set by the central government. This adjustment in the minimum wage demands employers to reassess their internal wage structure and scale in a fairer and more measured manner. The increase in wages should not be viewed solely as a burden but also as an opportunity to build a more prosperous workforce.
May 1st is commemorated as International Labor Day, which has its roots in the labor movement in the United States in 1886, demanding humane working hours. In Indonesia, Labor Day has been designated as a national holiday since May 1st, 2014, through Presidential Decree No. 24 of 2013.
This commemoration is not merely an annual event but also a moment to appreciate the contributions of workers to economic and social progress. It serves as a reminder to reflect on employment issues that remain relevant to the world of business and investment, including fair wages and industrial relations.
The Indonesian government, through Minister of Manpower Regulation No. 16 of 2024, has set a 6.5% increase in the national minimum wage for 2025. This increase is a follow-up to the Constitutional Court Decision No. 168/PUU-XXI/2023, which emphasizes the need to calculate minimum wages based on decent living needs and the contribution of workers to economic growth.
The regulation also affirms that the determination of minimum wages must take into account economic growth, inflation, and certain indices that reflect a balance between the interests of workers and businesses. It is important to understand the distinction between the Provincial Minimum Wage (UMP) and the Regency/Municipal Minimum Wage (UMK).
UMP is the minimum wage set by the governor for the entire province as the lowest wage threshold. In contrast, UMK is set more specifically for each regency or city and must be higher than the UMP. The UMK is determined by considering economic conditions, decent living needs, and recommendations from the local wage council.
In addition to UMP and UMK, the regulation also mandates the determination of sectoral minimum wages (UMS) for certain sectors that have specific characteristics. This is especially important for companies operating in labor-intensive sectors, high-risk industries, or those subject to specific business classifications (KBLI).
For businesses, this adjustment requires careful planning. Employers are expected to evaluate their internal wage structures and scales by considering factors such as job position, length of service, education, and competencies, as mandated by the Constitutional Court’s decision.
This approach is not only a form of regulatory compliance but also a manifestation of corporate responsibility. More importantly, businesses should not view the increase in minimum wage solely as a burden, but as an opportunity to foster a loyal, productive, and prosperous workforce. The welfare of workers has a direct impact on the long-term stability and operational quality of a company.
Labor Day reminds us that economic progress can be achieved when workers, employers, and the government work together to build a fair, healthy, and productive work environment. With the right regulations and shared awareness, Labor Day 2025 can become a key moment to maintain the balance between employee welfare and business sustainability.
As an illustration, through Governor of DKI Jakarta Decree No. 829 of 2024, the Provincial Government of DKI Jakarta has set a 6.5% increase in the Provincial Minimum Wage (UMP), from IDR 5,067,381 to IDR 5,396,791. This increase strictly follows the formula set out in Minister of Manpower Regulation No. 16 of 2024, in which the current year’s UMP is increased by a fixed rate of 6.5%.
In addition, the Provincial Government also sets Sectoral Minimum Wage (UMS) for certain sectors that are considered to have specific job characteristics, such as higher risk levels or certain technical skill demands.
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