May 7, 2025 • Intermezo, Knowledge • by Dennis Timothy T

2025 Edition: Complete Guide to Indonesia’s Minimum Wages by Province

Table of Contents

Indonesia’s minimum wages system is a system designed to protect workers’ welfare and ensure they receive an income necessary for living. This time, we will explain the minimum wage announced in Indonesia for 2025 and how the system works.

Indonesia’s Minimum Wages in 2025

Indonesia’s Minimum Wages in 2025 - timedoor

This data shows the minimum wages for each province in Indonesia for the year 2025. Below is a brief explanation of the characteristics and trends in the data.

Province	Minimum Wage
Aceh	IDR 3,685,615
North Sumatra	IDR 2,992,599
West Sumatra	IDR 2,994,193
Bangka Belitung	IDR 3,876,600
Riau Islands	IDR 3,623,653
Riau	IDR 3,508,775
Jambi	IDR 3,234,533
Bengkulu	IDR 2,670,039
South Sumatra	IDR 3,681,570
Lampung	IDR 2,893,069
Banten	IDR 2,905,119
Special Capital Region of Jakarta	IDR 5,396,760
West Java	IDR 2,191,232
Central Java	IDR 2,169,348
Yogyakarta	IDR 2,264,080
East Java	IDR 2,305,984
Bali	IDR 2,996,560
West Nusa Tenggara	IDR 2,602,931
East Nusa Tenggara	IDR 2,328,969
West Kalimantan	IDR 2,878,286
South Kalimantan	IDR 3,496,194
Central Kalimantan	IDR 3,473,621
East Kalimantan	IDR 3,579,313
North Kalimantan	IDR 3,580,160
Gorontalo	IDR 3,221,731
North Sulawesi	IDR 3,775,425
Central Sulawesi	IDR 2,914,583
Southeast Sulawesi	IDR 3,073,551
South Sulawesi	IDR 3,657,527
West Sulawesi	IDR 3,104,430
Maluku	IDR 3,141,699
West Maluku	IDR 3,408,000
Papua	IDR 4,285,848
West Papua	IDR 3,615,000

Provinces with High Minimum Wages

Special Capital Region of Jakarta: IDR 5,396,760 (approximately ¥50,000), the highest minimum wage in the country.
Due to high living costs as the capital and concentration of economic activity.
Papua Province: IDR 4,285,848.
Wages are higher due to geographical constraints and high logistics costs.
Bangka Belitung Province: IDR 3,876,600.
Wages are relatively high in this resource-rich region.

Provinces with Low Minimum Wages

Central Java Province: IDR 2,169,348, the lowest in all of Indonesia.
Known as a manufacturing hub due to low labor costs.
West Java Province: IDR 2,191,232.
Like Central Java, it has many labor-intensive industries.

Regional Characteristics on Minimum Wages

Java Island: Tends to have lower minimum wages than the national average.
Exception: Jakarta records the highest wage.
Kalimantan Island: Wages are higher in provinces like South Kalimantan and North Kalimantan due to active resource industries.
Sulawesi Island: Wages are high in Gorontalo and South Sulawesi, but somewhat lower in Central Sulawesi.
Papua Region: Higher minimum wages than the national average.
Influenced by logistics costs and infrastructure development challenges.

National Average Minimum Wages of Indonesia

The national average is around IDR 3,200,000 to 3,300,000.
There is disparity among provinces depending on living costs and the scale of economic activity.

Special Notes

Bali Province, a tourist destination: IDR 2,996,560.
Although living costs are high as a tourist area, wages are average compared to other tourist spots.
Urban-rural gap: Urban areas such as Jakarta offer high wages, while rural areas tend to have lower wages.

2025 Minimum Wages Talks: How Are Provinces Handling the Hike?

The minimum wage in Jakarta has increased approximately 31 times from IDR 172,500 in 1997 to IDR 5,396,761 in 2025. Here are the key points:

Long-term increase trend: Driven by economic growth, inflation, and rising living costs.
Steady growth: Since 2017, the increase has been maintained at around 5-7% annually.
Impact of COVID-19: From 2020 onward, the economy stagnated due to COVID-19, but the minimum wage continued to increase slowly.
Recent trend: The wage has continued to rise gradually since 2023, and is expected to reach IDR 5,396,761 in 2025.

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How minimum wages are determined and their characteristics

How minimum wages are determined and their characteristics - Timedoor

1. Determination of Minimum Wages

Minimum wages are set annually by local governments based on the central government’s policy. There are primarily two types:

Provincial Minimum Wage (UMP – Upah Minimum Provinsi): The minimum wage applied across an entire province.
Regency/City Minimum Wage (UMK – Upah Minimum Kabupaten): The minimum wage applied in specific regencies or cities, typically higher than the UMP. This is based on the economic conditions and cost of living in each region.

2. Criteria for Calculating Minimum Wages

The calculation of minimum wage is based on the 2020 Labor Creation Law (Law No. 11) and the 2021 Government Regulation on Wages (Regulation No. 36). The following factors are considered:

Inflation: The rate of increase in the prices of goods and services.
Economic Growth Rate: The growth rate of the region’s Gross Regional Domestic Product (PDRB).
Basic Living Cost (KHL): The minimum living expenses required for workers.

3. Decision Process of Minimum Wages

Wage Committee Recommendation: The provincial and regency/city wage committees conduct surveys on living expenses and economic analysis.
Governor’s Decision: The governor makes the final decision on UMP and/or UMK based on the recommendations from the wage committee.

4. Obligations of Employers

Employers are required to pay workers at least the minimum wage applicable to their region. Key points include:

Minimum wage applies to workers with less than one year of service.
Workers with over one year of service typically receive salaries above the minimum wage.
Violating this regulation may result in administrative or criminal penalties.

5. Exceptions

There are some exceptions to the obligation to pay minimum wages:

New Businesses: Newly established businesses may apply for a postponement in paying the minimum wage.
Small and Medium Enterprises (UMKM): In some cases, with government supervision and mutual agreement between the worker and employer, it may be allowed to pay less than the minimum wage.

6. Minimum Wages Implementation Challenges

While the minimum wage system aims to protect workers, there are several challenges:

Compliance Issues: Not all businesses, especially in the informal sector, adhere to minimum wage laws.
Regional Disparities: There are significant differences in UMK between major cities and rural areas.
Economic Impact: A significant increase in the minimum wage can impact a company’s ability to maintain employment levels.

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Summary

Indonesia’s minimum wage system is designed to protect workers’ welfare and ensure a basic standard of living. In 2025, the highest minimum wage will be in the Special Capital Region of Jakarta at IDR 5,396,760, while the lowest will be in Central Java at IDR 2,169,348. The minimum wage is reviewed annually based on inflation rates and economic growth, but challenges such as regional disparities and low compliance rates remain. When deciding on the optimal location for your business, it’s important to consider minimum wages in addition to other factors.

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Quick Recap: Basic Information about Indonesia

Category	Details
Location	Situated in Southeast Asia; an archipelagic nation with over 17,000 islands
Geography	Located on the equator; features tropical rainforests, volcanoes, and abundant marine resources
Major Islands	Java, Bali, Borneo (Kalimantan), Sumatra, Sulawesi, New Guinea (Papua)
Population	Approx. 278 million (as of 2024 estimate)
Language	Official language is Indonesian; English is widely used in business and tourism
Ethnic Groups	Around 300 ethnic groups and over 700 languages
Key Industries	Natural resources (oil, gas, minerals), manufacturing, agriculture, services, and digital economy
International Relations	Founding member of ASEAN, G20 member, increasing foreign direct investment
GDP	Approx. USD 1.4 trillion (2024 estimate)
GDP per Capita	Approx. USD 5,000 (2024 estimate)
Unemployment Rate	Approx. 5.2% (2024 estimate)
Inflation Rate	Approx. 3.0% (2024 estimate)
Main Exports	Oil and gas, minerals, electronics, garments, agricultural products (e.g. palm oil, coffee)
Major Trading Partners	China, Japan, United States, Singapore, India

Glossary of Terms Used in This Article

Minimum Wage: The legally guaranteed minimum amount of pay that a worker must receive. In Indonesia, this is set by each province, regency, or city.
UMP (Upah Minimum Provinsi): Provincial Minimum Wage. This applies to the entire province.
UMK (Upah Minimum Kabupaten/Kota): Regency/City Minimum Wage. Applies to specific regions and is usually higher than the UMP.
KHL (Kebutuhan Hidup Layak): Decent Living Needs. A standard for the minimum cost necessary for a worker to maintain a basic standard of living.
Inflation Rate: The rate at which the prices of goods and services increase over time.
Economic Growth Rate: The rate at which the economic size of a region or country expands over a specific period.
Informal Sector: Economic activities not formally recorded by the government. Compliance with minimum wage regulations is often difficult in this sector.

FAQ

Q1: How is the minimum wage determined in Indonesia?

A: Indonesia’s minimum wage is determined annually by local governments based on national government guidelines. There are two types: Provincial Minimum Wage (UMP) and Regency/City Minimum Wage (UMK). These are set considering the inflation rate, economic growth rate, and the Decent Living Needs standard (KHL).

Q2: Why is the minimum wage in Jakarta higher?

A: As the capital city and economic center of Indonesia, Jakarta has a higher cost of living. This is the main reason why its minimum wage is the highest in the country.

Q3: Why is the minimum wage in Central Java lower?

A: Central Java has relatively low labor costs and is a hub for manufacturing industries. Therefore, its minimum wage is set lower than the national average.

Q4: What are the penalties for companies that do not comply with the minimum wage?

A: Companies that fail to comply with minimum wage regulations may face administrative sanctions, fines, or even criminal penalties. However, enforcement can be difficult in the informal sector.

Q5: What impact does the minimum wage have on the economy?

A: Raising the minimum wage helps improve workers’ welfare but may also affect a company’s ability to maintain employment. This is especially risky for small businesses and labor-intensive industries, potentially leading to job cuts.

Q6: How does Indonesia’s minimum wage compare to other countries?

A: Indonesia’s minimum wage is moderate compared to other emerging Asian countries. However, there are significant differences depending on the cost of living and economic scale of each province.