UMP 2026: New Formula, Updated Figures, and What It Means for Payroll
Indonesia's 2026 minimum wage is in effect from 1 January under the new PP No. 49/2025 formula. Key provincial figures, how the formula works, and what HR and finance teams should prepare.
From 1 January 2026, the Provincial Minimum Wage (UMP) across Indonesia is in effect under a new formula established by Government Regulation No. 49 of 2025 on Wages. The national average increase ranges from 5â8%, calculated on inflation plus regional economic growth.
The new UMP formula
PP No. 49/2025 changes the formula to: Inflation + (Economic Growth Ă Alpha Index). The alpha index now ranges from 0.5â0.9âup significantly from the previous 0.1â0.3 range. The change aims to narrow wage gaps across provinces and give workers a larger share of regional economic growth.
2026 UMP in key provinces
- DKI Jakarta: Rp 5,729,876 (up 6.17%) â highest nationally.
- Banten: Rp 3,100,881
- East Java: Rp 2,446,880
- West Java: Rp 2,317,601
District/City Minimum Wages (UMK) are set by each provincial governor and generally exceed the UMP. Always verify the UMK applicable at your specific operating location, as the difference within a single province can be significant.
Direct payroll impact
- Workers earning below the new UMP/UMK must be adjusted from 1 January 2026.
- Changes to base wages affect BPJS Ketenagakerjaan and BPJS Kesehatan contribution bases.
- Fixed allowances calculated as a percentage of base wages change accordingly.
- Payroll systems and payslips must be updated from the start of the periodânot corrected the following month.
What HR and finance teams should prepare
- Audit positions with wages near the UMP/UMK thresholdâincluding contract staff and workers placed through outsourcing partners.
- Model the total labor cost impact and update budget projections.
- Coordinate with your payroll vendor or BPO partner to ensure updates run on schedule.
Sigma Solusi Servis supports clients with accurate, compliant payroll managementâincluding ensuring minimum wage adjustments are applied on time whenever new regulations take effect.