Business · Economy · 2 hrs ago
Indonesian labour leader says factory closures are not driven by minimum wages
KSPI president Said Iqbal says minimum wages are not causing factory closures in Indonesia.
He argues against claims that his proposed 7.5% to 9.5% minimum-wage increase would lead to more layoffs or bankruptcies.
Iqbal says many closures from 2025 to June 2026 were in areas with low minimum wages, including parts of Central Java, Yogyakarta and East Java.
He says export-focused factories, especially in textiles, garments and footwear, have been hit by weaker international demand.
Other pressures include rising costs for gas, raw materials and fuel, and limited access to alternative markets as consumer buying power falls.
Iqbal also points to foreign investors moving production out of Indonesia, including some companies from Japan and South Korea.
He says these pressures, not wage increases, explain the closures, and is proposing the 7.5% to 9.5% rise for next year.
Said Iqbal, president of the Indonesian Trade Union Confederation, said minimum wage increases are not driving factory closures in Indonesia.
He said union records showed that from 2025 through June 2026, the most factory closures were in areas with low minimum wages.
Iqbal attributed closures to falling export demand, rising production costs, limited access to alternative markets and foreign investors leaving Indonesia.
He proposed a regional minimum wage increase of 7.5% to 9.5% for next year.
- Who
- Said Iqbal, president of the Indonesian Trade Union Confederation (KSPI).
- What
- He said minimum wage increases are not the cause of factory closures and proposed a 7.5% to 9.5% increase.
- When
- He made the remarks on October 13, 2026; the article was published October 14, 2026.
- Where
- Indonesia.
- Why
- He said closures were driven by factors including falling export demand, rising production costs, limited alternative markets and foreign investors leaving.
This story does not have two clearly opposing sides.
KSPI records cited by Iqbal showed the most factory closures in areas with low minimum wages.
Iqbal made his remarks during a virtual press conference.
Detik published its report on Iqbal’s comments.
- Proposed wage increase
- 7.5% to 9.5%
- Period cited for closures
- 2025 through June 2026
- Areas mentioned
- Central Java, Yogyakarta, East Java, Majalengka, Cirebon and Sumedang
- Examples of departing investors
- Japanese and South Korean companies
- Example of a company pulling out
- Sanken, an electronics company, which Iqbal said was moving production to Japan
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What people are saying
From 2025 to June 2026, according to KSPI records, the factories that closed the most were in areas where the minimum wage is low.
It is not true that a 7.5% to 9.5% minimum wage increase will cause layoffs.
Because the international market is slowing, demand for Indonesia’s goods has also fallen.