Minimum Wage in Indonesia: How It Is Set and Who It Applies To
The minimum wage in Indonesia is provincial, resets every January, and applies to a worker's first year. What that means when you are budgeting a hire.
- UU No. 13 Tahun 2003 on Manpower, as amended by UU No. 6 Tahun 2023 (the Job Creation Law) — Article 88C(1)–(3), the provincial and city minimum wages; Article 88D, the formula; Article 88E(1), that the minimum wage applies to service of less than one year; Article 88E(2), the prohibition on paying below it; Article 90A, pay above the minimum by agreement; Article 90B(1)–(3), the exclusion of micro and small businesses. Articles 89 and 90 of the 2003 Law are deleted
- PP No. 36 Tahun 2021 on Wages, as amended by PP No. 51 Tahun 2023 and PP No. 49 Tahun 2025 — PP 49/2025 Article 26(4)–(6), the formula and the range of the α variable; Article 27(1), the annual duty on governors; Article II, the 2026 timetable. PP 51/2023 Articles 31 and 33(3), a city minimum only where it is higher
- 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 the one most often missed.
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. A governor may also set one for a city or regency — the UMK — but only where the calculation for that city comes out above the province’s (UU 13/2003 Article 88C(1)–(3), as amended by the Job Creation Law; the annual duty is PP 49/2025 Article 27(1), and the same city rule is repeated in PP 51/2023 Article 31).
So a city minimum below its own province’s does not exist. Wherever you hire, the province’s figure is the floor, and some cities sit above it.
The lowest starting 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 lawful starting wage in the country this year. The highest is Jakarta, at IDR 5,729,876 (Keputusan Gubernur DKI Jakarta No. 1142 Tahun 2025).
It applies to the first year, not to everyone
This is the one that catches people out. 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 88E(1)).
After a year with the same employer, pay is set by agreement between the company and the employee (Article 90A), working from the company’s own wage structure and scale. An employer is prohibited from paying a first-year worker below the minimum (Article 88E(2)).
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 88E(1) |
| 1 year or more | Agreement, on the company’s wage structure and scale | Article 90A |
| Micro and small businesses | Agreement, with a floor tied to average consumption | Article 90B |
The micro and small business row is why you will occasionally see an Indonesian employer paying below the UMP quite lawfully. It does not help a foreign-owned company: a PT PMA — a foreign investment company — is not a micro or small business.
The figure moves every year, by formula
Each year’s figure is last year’s plus an adjustment, and the adjustment is set out in the regulation rather than negotiated from scratch:
UM(t+1) = UM(t) + {inflation + (economic growth × α)} × UM(t)
α is a variable the government fixes within a range of 0.50 to 0.90 (PP 49/2025 Article 26(4)–(6)). Governors publish the following year’s figures in late December — for 2026 the deadline was 24 December 2025 (PP 49/2025 Article II) — and they apply from 1 January.
The practical consequence is that your Indonesian wage bill has a known review date. It is not a surprise, and it is not negotiated company by company.
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 from both sides, 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 by more than double. West Java and Jakarta are about IDR 3.4 million a month apart on the same role, which is a real consideration when you are choosing a location rather than a candidate.
Tracking the December 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 is the difference between UMP, UMK and UMR?
Does the minimum wage apply to a PT PMA?
The regulations themselves are published by BPK’s legal documentation service, and each province publishes its own governor’s decree each December.
Note
This article is general guidance and is not a substitute for advice on your own situation. Provincial figures change each January; confirm the current one for your province before budgeting.