Minimum Wage in Indonesia: How It Is Set and Who It Applies To
The minimum wage in Indonesia is set yearly for each province, and for some cities, and applies to a worker's first year. What it means for budgeting a hire.
References (4)
- UU No. 27 Tahun 2026 on Manpower Protection, in force 28 October 2026, revoking UU No. 13 Tahun 2003 — Article 137(1)–(5), the provincial, city and sectoral minimum wages; Article 139(1), (4) and (5), the formula or decent living needs, whichever is higher, and the details left to a government regulation; Article 140(1), that the minimum wage applies to service of less than one year; Article 140(2)–(3), what it covers; Article 140(5), the prohibition on paying below it; Article 140(6)–(8), an exemption applied for to the governor; Article 142, sectoral minimums for certain sectors, higher than the general ones; Article 143, pay above the minimum by agreement; Article 144(1)–(3), micro and small businesses, by agreement at no less than 50% of the minimum (a PT PMA is a large business: Permeninves/BKPM 5/2025 Article 26(1)); Article 146(4), the wage structure and scale for service of one year or more; Article 310, the regulations made under the old law kept in force where they do not conflict with it
- PP No. 36 Tahun 2021 on Wages, as amended by PP No. 51 Tahun 2023 and PP No. 49 Tahun 2025 — Article 26(4)–(7) and (9), the formula, the range of the α variable, who sets it, and no fall when the formula gives no increase; Article 27(1), the governor's duty to set a provincial figure every year; Article 29(1) and (3), the provincial figure announced by 21 November and in effect from 1 January (as amended by PP 51/2023); Article 35(2) and (4), the city figure by 25 November and in effect from 1 January (PP 49/2025); PP 49/2025 Article II, the one-off 2026 timetable. PP 36/2021 Article 16(1) to (4), hourly pay for part-time staff only, agreed between the parties, and its floor, the monthly wage divided by 126, not amended by PP 51/2023 or PP 49/2025
- Keputusan Gubernur Jawa Barat No. 561/Kep.859-Kesra/2025, 23 December 2025 — the 2026 West Java provincial minimum wage, the lowest in the country
- Keputusan Gubernur DKI Jakarta No. 1142 Tahun 2025 — the 2026 Jakarta provincial minimum wage
There is no national minimum wage in Indonesia. There are provincial ones, a governor sets each of them every year, and they take effect on 1 January.
For a company planning its first hires, three things follow from that, and the third is easy to miss.
The three things worth knowing before you budget
It is provincial, and a city may only go higher
A governor must set a provincial minimum wage, the UMP, every year (PP 36/2021 Article 27(1), as amended). A governor may also set one for a city or regency — the UMK — and it must be higher than the province’s (Article 137(2)–(5) of the new manpower law, UU 27/2026, in force since 28 October 2026).
So a city minimum cannot be set below its own province’s. Wherever you hire, the province’s figure is the floor, and some cities sit above it. Where a sectoral minimum is set for certain sectors, it must be higher than the general figure for the same province or city (Articles 137 and 142).
The lowest minimum wage anywhere in Indonesia in 2026
IDR 2,317,601 a month — West Java’s provincial minimum wage for 2026 (UMP Jawa Barat 2026, Keputusan Gubernur Jawa Barat No. 561/Kep.859-Kesra/2025, 23 December 2025). Because no city may be set below its province, this is the lowest minimum wage in the country this year. The highest provincial minimum wage is Jakarta’s, at IDR 5,729,876 (Keputusan Gubernur DKI Jakarta No. 1142 Tahun 2025).
It applies to the first year, not to everyone
The minimum wage is a starting wage: the law ties it to an employee with less than one year’s service at the company concerned (Article 140(1)).
Pay above the minimum is agreed with the employee or their trade union (Article 143), and for staff with a year or more the company’s own wage structure and scale is the guide (Article 146(4)). Outside the exceptions below, an employer may not pay a first-year employee less than the minimum (Articles 140(1) and (5)).
What that means in practice: the January increase is not a company-wide pay rise. It resets the floor for new joiners and for anyone still inside their first year.
| What sets the pay | Where it comes from | |
|---|---|---|
| Under 1 year | At least the provincial or city minimum wage | Article 140(1) |
| 1 year or more | Agreement, guided by the company’s wage structure and scale | Articles 143 and 146(4) |
| Micro and small businesses | Agreement, at no less than 50% of the minimum wage | Article 144 |
The micro and small business row applies only to micro and small businesses, which agree pay with their staff at no less than 50% of the minimum wage (Article 144). It does not help a foreign-owned company: a PT PMA, a foreign investment company, is classed as a large business (Permeninves/BKPM 5/2025, Article 26(1)).
The figure moves every year, by formula
The new law works the figure out by a formula that weighs economic growth, inflation and a set index, or from the cost of decent living, whichever is higher, and leaves the details to a government regulation (Article 139).
The regulation used for the 2026 figures, PP 36/2021 as amended, stays in force where it does not conflict with the new law (Article 310). Its formula adds an adjustment to last year’s figure:
UM(t+1) = UM(t) + {inflation + (economic growth × α)} × UM(t)
α is a variable within a range of 0.50 to 0.90, its value set by the provincial or city wage council (PP 36/2021 Article 26(4)–(7), as amended). Governors announce the provincial figure by 21 November and city figures by 25 November (Articles 29(1) and 35(2), as amended); for 2026 alone both dates were moved to 24 December 2025 (PP 49/2025 Article II). The figures apply from 1 January (Articles 29(3) and 35(4)).
The practical consequence is that your Indonesian wage bill has a known annual review date.
The minimum wage is the lowest monthly wage, meaning the wage without allowances or the basic wage plus fixed allowances. Where pay is a basic wage with non-fixed allowances, the basic wage alone must reach it (Article 140(2)–(3)). Our note on fixed and non-fixed allowances explains the difference.
What this means for a hiring plan
Two things follow for a company costing out a team.
The first is that the minimum wage is not what a hire costs. On top of the wage sit BPJS (Indonesia’s social security scheme) health and employment contributions, some paid by you and some by the employee, PPh 21 income tax, and the religious holiday allowance. Our cost of an employee calculator works out the whole figure from a salary, and our note on PPh 21 explains the tax layer.
The second is that where you hire changes the floor. The provincial minimum is IDR 2,317,601 a month in West Java and IDR 5,729,876 in Jakarta, which is a real consideration when you are choosing a location rather than a candidate.
Tracking the annual decrees is part of what our HR consulting and payroll teams do. For companies hiring before they have an Indonesian entity, our employer of record service carries the obligation.
Frequently asked questions
Which figure applies if my staff work in more than one place?
Does the minimum wage go up every year?
Do I have to raise everyone's pay each January?
What if a company cannot afford the minimum wage?
What is the difference between UMP, UMK and UMR?
Can I pay staff by the hour?
Does the minimum wage apply to a PT PMA?
The law and the wage regulation are published by BPK’s legal documentation service (UU 27/2026, PP 36/2021), and each province publishes its own governor’s decree late each year.
Note
This article is general guidance and is not a substitute for advice on your own situation. New figures take effect each 1 January; confirm the current one for your province before budgeting.