The Indonesian Employers Association (Apindo) has asked the government to refine the minimum wage calculation formula by aligning specific index values with the updated Decent Living Needs (KHL) standard after the number of goods and services used as KHL reference items surged from 64 to nearly 200 for the 2026 wage establishment.

Apindo Vice Chair for Employment, Darwoto, noted that several regencies and cities now have minimum wages exceeding their local KHL level. Representing employers in the National Wage Council (Depenas), he proposed a differentiated index range to accommodate regional disparities.

For regions where the minimum wage surpasses the KHL value, he recommends a lower index of 0.1–0.3, while regions still below the KHL threshold should apply a 0.3–0.5 index.

“With the government setting KHL figures, everyone can clearly see which regions have fast-growing or slower wage increases. This ensures stakeholders can better measure fairness,” Darwoto said on Tuesday, November 25, 2025.

Depenas ‒ composed of employer, government, and labor representatives ‒ has agreed that next year’s minimum wage formula will combine inflation with the product of economic growth and a defined index.

According to Darwoto, regions with minimum wages already higher than KHL generally include major industrial zones. Data from the Ministry of Industry show around 60 percent of Indonesia’s industrial estates are located on Java, with 173 estates spread across 63 regencies/cities nationwide. These areas, he argued, should adopt the lower index band of 0.1–0.3.

He believes indexing wages to KHL will help gradually reduce wage disparities within the same province, since the government sets KHL based on a provincial benchmark.

“It will take time to eliminate the disparity, but we strongly expect next year’s wage determination to follow the formula ‒ unlike this year,” he said.

Apindo’s Head of Employment Bob Azam echoed the call for caution, emphasizing that local governments should avoid setting overly high index values when applying the 2026 wage adjustment under the new framework.

The Ministry of Manpower plans to remove national reference figures and empower regional authorities in minimum wage setting, but Bob stressed that Apindo is not advocating for the lowest-paid wage structure.

Instead, he emphasized company-level negotiations based on capability.

“North Maluku experienced economic growth of up to 30 percent over the last 12 months. Therefore, we hope the index should not be set too high to prevent widening regional wage gaps,” Bob said as quoted by Katadata.co.id on Friday, November 21, 2025.