11As the month progresses, there will be a lot more comments regarding the minimum wage decision. Under current legislation, the state minimum wage that will be applied from January 1 of the following year must be determined by 40 days before enforcement, i.e. by November 21, and the prefectural/city minimum wage must be determined by 30 days before implementation, i.e. by December 1. This deadline has been violated by the government many times in the past, so business associations and companies are turning a blind eye to the slight delay, but it is a matter of concern. Last year, the president suddenly decided without any explanation that wages should be raised by 6.5% across the board, and the governors of each state quickly decided to follow suit.However, in addition to the unexpectedly large increase, the minimum wage for each sector was also reinstated, which must have been confusing for companies. It is likely that some sectoral wages will continue to be determined, but I am concerned about the minimum wage in 2026.

[Labor union federation's demands]

8 Around February, a federation of labor unions suddenly makes a comment like ``It would be appropriate to raise next year's minimum wage by 0%.'' The basis for this is vague, and it is no different from the labor unions at various companies who end up demanding that the rate be increased by this much, and loudly insisting that it be 10% or 15%. This is because the government listens to the opinions of labor and management before making a decision, and this time as well, they continued to say a high percentage. However, since mid-November, the demand has suddenly been lowered, and the current demand is around 7.7%. At the same time, we are strongly insisting that ``it is unacceptable for the rate of increase to fall below the rate of increase in 2025.'' Based on these developments, we predict that the government, wanting to avoid large-scale demonstrations and riots by labor unions, is likely to decide on a 6.5% to 7.7% salary increase.
As for other developments, people have suddenly started shouting out baseless figures regarding Jakarta, saying, ``It would be appropriate to set it at 6 million rupiah.'' Regarding wages by sector, for some reason, there are arguments that a separate minimum wage should be set for specified foreign-affiliated companies, and the situation is becoming such that there are no laws or regulations.

[Preparation as a company]

Even under these circumstances, next year's minimum wage will probably be set. Under such circumstances, what preparations should companies make? Just because the government does not comply with the law and makes its own decisions does not mean that companies can also make their own decisions. You need to check and understand the laws and regulations that have been promulgated to determine what the minimum wage is that your company applies. Also, be sure to check the work regulations, collective bargaining agreement, and the data that forms the basis of the annual wage adjustment that has normally been carried out up until now. Many companies have regulations that take into account factors such as the inflation rate, the company's capabilities, and the surrounding circumstances, but some companies may have agreements with their labor unions regarding various points that should be taken into consideration. In particular, it is necessary to check what data is being used to understand the company's capabilities. I think it would be easier to proceed smoothly by checking whether the annual wage adjustment (often referred to as annual salary increase) is the basis of the annual wage adjustment, obtaining that data, and in the case of a collective bargaining agreement, reaching an agreement in advance with the labor union before proceeding with the negotiations.