During the recent quite good economic times, trade unions have intensified their demands for improved labour conditions, and the government has acquiesced to regulating improved labour standards in 2011-2012. Indications are that an even more active union campaign in 2012 to erradicate low wages (hapuskan upah murah) and outsourcing will bring about larger increases in minimum wages than in the previous year. A more strategic and united approach on the part of national union bodies is driving this pro-labour policy agenda, against a backdrop of increasing inequality and a rapidly growing middle class. Calls for greater wage justice have grown in popularity in regional electoral policies and are likely to feature more prominently in the strategies for the 2014 elections. They occur at a time when unemployment has been declining and the number of modern sector jobs has expanded. These developments appear to have confirmed a growing popular belief that Indonesia no longer needs to follow an ‘East Asian’ route that focuses on expanding employment of unskilled workers through the export of labour-intensive goods. For several East Asian countries, this has been one of the main pathways out of poverty. An alternative strategy of moving towards higher value-added production at home and abroad, and at the same time pushing up wages, may create problems for jobs and equity in the future. Such a policy is likely to create a cleavage between workers protected by labour regulations, on the one hand, and a much larger group who earn much lower labour incomes and are more vulnerable to the vicissitudes of the market, on the other.