Businesses Prefer to Negotiate with Workers on Wage Hikes Themselves
Jakarta. Businesses are hoping for the government to let them negotiate the minimum wage with their employees on their own rather than follow a government-set formula.
The government is responsible for setting the provincial minimum wage, which companies are mandated to follow. Labor has demanded an 8.5 percent to 10 percent hike in the threshold for 2026. This marks a major jump compared to the 6.5 percent increase this year. Indonesia is expected to announce the 2026 provincial minimum wage in less than 24 hours from now.
Despite the nearing deadline, Apindo once again pitched the idea of a “bipartite dialogue” which sees the management and workers of the same company sitting together to find a win-win solution. According to the association, people within the company would be more knowledgeable of the internal financial situation, thereby allowing them to set a figure that doesn't take a toll on business while keeping workers happy.
"It's not that we are against wage hikes, but it should be something that takes place in a bipartite dialogue at each company, not via a minimum wage mechanism,” Bob Azam, the head of employment affairs at Apindo, said in a talk show on Beritasatu TV on Thursday.
“We can’t force companies to follow a minimum wage threshold. Some companies might be doing great right now, but others might be struggling. … The ones who know it best are the workers' representatives and employers. It’s not the government, the federation of trade unions, or even Apindo.”
Bob acknowledged that a significant wage increase could trigger layoffs. At least 50 percent of companies in a recent Apindo survey admitted to have cut their workforce. Businesses might even have to lay off more people “if the situation does not improve”, Bob warned. The businessman also highlighted how some workers out there were still earning less than the provincial minimum wage.
“Just take a look at Apindo. We have 13,000 members, but 90 percent of them are small enterprises like restaurants. They are even struggling to meet the 2025 minimum threshold,” Bob said.
Tags: Keywords:
Related Articles
Data Leak Fears Plague Indonesian Firm Annual Reporting Rule
Limited liability companies must submit their annual reports to a ministry-run system, sparking fears over data leaks.
Exporters Endorse State Export Agency DSI, Seek Gradual Rollout
Indonesia’s leading business groups backed Prabowo’s export reform plan while calling for a gradual and transparent rollout.
Rupiah Slide Pushes Indonesian Firms Into Cost-Cutting Mode
Companies boost hedging, cut spending, and seek local suppliers as rupiah weakness hits operations.
Weakening Rupiah Forces Indonesian Businesses to Delay Expansion Plans
Around 70% of manufacturing raw materials in Indonesia are still imported, while raw materials account for roughly 55% of production costs.
Indonesia’s 5.61% Growth Not Fully Felt by Businesses, Apindo Says
Indonesia’s 5.61% growth masks business strain, with rising costs and a weaker rupiah squeezing margins, Apindo says.
Apindo Warns Production Could Stall Next Month on Supply Shortages
Apindo warns of supply disruptions and rising costs as Middle East tensions hit raw materials, raising risks to production stability
Indonesia’s Workforce Grows Faster Than Jobs, 1.5 Million Left Behind
About 3.5 million people enter the workforce annually, while the economy is only able to absorb roughly 2 million.
Businesses Question One-Day WFH Plan
Businesses warn the proposed one-day WFH policy risks disrupting operations, urging a deeper study and flexible, sector-specific rules.
Low Export Keeps Indonesian Small Businesses Safe From Iran War Impact
As of 2024, MSMEs made up 15.7% of Indonesia’s non-oil and gas exports.
Apindo Warns of Mass Layoffs as Tangerang Sets 6.3% Minimum Wage Increase
A 6.3% minimum wage hike in Tangerang has sparked warnings of layoffs and factory relocations as manufacturers struggle with rising costs.The Latest
Dear Mr. President, Don’t Skip ASEAN Summits
Despite calls for Prabowo to stay home, the Indonesian leader still needs to attend ASEAN summits.
PLN Rushes Coal Supplies After Power Outages Hit Java
PLN is rushing to secure coal supplies after shortages triggered rolling blackouts across Java, disrupting businesses and daily life.
Japan-Backed ADB Invests in Indonesia’s Human Capital
As many as 399 Indonesian awardees have joined the ADB-Japan Scholarship Program from 1988 to 2024.
Indonesian Stocks Rise Despite Foreign Outflows as MSCI Review Looms
Indonesia's JCI rose 2.8% as easing geopolitical tensions offset foreign outflows, MSCI concerns and rupiah pressures.
