Bali Workers Seek IDR 5.2 Million Minimum Wage as Governor Warns of Business Closures

BALI — How much does it really cost to live and work in Bali? That question is at the heart of growing demands for a higher provincial minimum wage in 2027, as workers argue that rising living costs are increasingly out of step with their earnings.

Labor representatives and students are urging Bali Governor Wayan Koster to set the 2027 Provincial Minimum Wage (UMP) at IDR 5.2 million per month, arguing that the figure better reflects the island’s actual cost of living. However, Koster has warned that setting wages at that level could put pressure on businesses and potentially lead to job losses.

The debate highlights a challenge facing Bali, one of Indonesia’s leading tourism destinations: how to ensure that economic growth benefits local workers while keeping businesses financially sustainable.

Why Bali Workers Are Demanding IDR 5.2 Million

For many workers, the demand for higher wages is about more than simply earning a bigger monthly salary. It is about keeping up with the cost of everyday life in Bali.

Food and other basic necessities, housing, fuel and household cooking gas all contribute to household expenses. Workers also face the financial obligations associated with participating in Bali’s customary and cultural activities, which often require contributions and spending on religious ceremonies and traditional offerings, known locally as upakara.

These costs add another dimension to the debate over what constitutes a reasonable minimum wage on the island.

The issue was raised during a meeting between Koster and representatives of workers and students at the Bali Governor’s Office in Denpasar on October 21, 2026.

The delegation included I Made Dewa Rai Budi Darsana, secretary of the Independent Workers Federation (FSPM), action coordinator Excel Bagaskara and two student representatives.

They asked the provincial government to exercise its discretion in setting the 2027 minimum wage, using Bali’s estimated decent living needs, or Kebutuhan Hidup Layak (KHL), of IDR 5.2 million as the benchmark.

Rai Budi Darsana argued that the existing wage-setting formula would leave workers struggling to meet their basic needs.

“This is an opportunity for Mr Koster to improve the welfare of his people. So, when else?” Rai said after the meeting.

He estimated that applying the formula under Government Regulation No. 49 of 2025 would increase wages by only around IDR 200,000. With Bali’s current provincial minimum wage at approximately IDR 3.2 million, he said the 2027 figure could reach only around IDR 3.4 million.

That would leave a substantial gap between the minimum wage and the IDR 5.2 million living-cost benchmark cited by the workers.

“Once again, our decent living needs are valued at IDR 5.2 million. Please listen to our cries,” Rai said.

Economic Growth, but Are Workers Benefiting?

The workers’ demands also raise questions about how the benefits of Bali’s economic growth are distributed.

Excel Bagaskara argued that Bali’s economic growth and labor productivity have consistently exceeded national averages, while wages remain below what workers consider necessary for a decent standard of living.

He also pointed to the significant role of foreign investment in Bali, claiming that foreign direct investment accounts for around 70 percent of investment on the island.

For the delegation, these conditions raise a fundamental question: if the economy continues to grow and investment flows into Bali, why are workers still struggling to meet their living costs?

“Economic growth is not being enjoyed by workers in Bali,” Excel said.

The wage-setting mechanism currently considers economic growth, inflation and a specific index used in calculating annual increases. Excel said his calculations suggested that even using the highest index value would produce an increase of only around IDR 200,000.

The delegation therefore wants the provincial government to consider the actual cost of living more directly when determining the 2027 minimum wage.

Rai also argued that wage policy should recognize the financial responsibilities workers face in maintaining Bali’s customs and cultural traditions, which form an important part of the island’s social life.

What About Small Businesses and Tourism Employers?

The proposed increase has also raised concerns about its potential impact on businesses, particularly in an economy heavily dependent on tourism.

Employers may face higher operating costs if wages rise substantially. For hotels, restaurants and other tourism-related businesses, the ability to absorb those costs can vary depending on occupancy, visitor spending, labor requirements and overall business performance.

Some tourism businesses have expressed reservations about a significant increase, arguing that higher wages need to be matched by sufficient revenue from visitors staying at their properties.

However, the workers’ representatives say the cost of living should not be overlooked when assessing businesses’ ability to pay.

Responding to concerns about micro, small and medium enterprises (MSMEs), Rai said wage arrangements for smaller businesses should also take account of agreements between employers and workers. He referred to a minimum benchmark of 50 percent of living costs in discussing such arrangements.

The competing arguments illustrate the difficulty of setting a wage floor that protects workers without placing excessive pressure on businesses with limited financial capacity.

For workers, the concern is that a modest annual increase may leave them increasingly unable to afford basic necessities. For employers, the concern is whether a sharp increase could affect prices, profitability and their ability to retain staff.

Koster Considers a Lower Increase for 2027

Koster said the provincial government would examine the Constitutional Court ruling cited by the delegation, as well as Government Regulation No. 49 of 2025, to determine whether decent living needs could be used as a consideration in setting the minimum wage.

He has also asked Bali’s Regional Research and Innovation Agency (BRIDA) to study the proposed 2027 provincial minimum wage, along with district and city minimum wages and sectoral minimum wages.

In the meantime, Koster has conducted a simulation using an alpha coefficient of 0.9, the highest value in the formula he cited.

The simulation puts Bali’s 2027 provincial minimum wage at approximately IDR 3.45 million, representing an increase of around 7.6 percent from the previous year.

Despite the projected increase, Koster acknowledged that the figure remained relatively low.

He said the government needed to balance workers’ demands with employers’ capacity to sustain their operations, warning that a substantial increase in labor costs could raise production expenses and push up the prices of goods and services.

“Basically, the provincial minimum wage can be increased further. However, if IDR 5.2 million is used as the benchmark, I think many companies would close. If many companies close, workers will lose their jobs. This needs to be considered,” Koster said.

The governor said the BRIDA study would serve as the basis for further discussions with the Wage Council and other relevant stakeholders.

The next stage of deliberations is expected to involve a tripartite process bringing together the government, employers and workers.

Can Bali Find a Middle Ground?

The debate over Bali’s 2027 minimum wage goes beyond a dispute over numbers. It reflects competing expectations about what economic progress should deliver for the people who live and work on the island.

For workers, IDR 5.2 million represents a benchmark they believe more accurately reflects the cost of maintaining a decent standard of living in Bali. For the provincial government, the challenge is to determine how far wages can rise without undermining business continuity and employment.

The projected increase to IDR 3.45 million remains significantly below the workers’ requested benchmark. Whether the final figure moves closer to their demand will depend on the government’s study, discussions with employers and labor representatives, and the applicable wage-setting rules.

As Bali continues to attract international visitors and investment, the outcome will be closely watched by workers seeking a fairer share of the island’s economic gains, as well as businesses concerned about rising operating costs.

Ultimately, the question facing Bali is not simply how much the minimum wage should increase in 2027, but whether the island’s economic success can translate into a more affordable and sustainable life for the people who keep its economy running.