Explore a comprehensive guide to wages, working hours, and benefits in Indonesia. Gain valuable insights into minimum wage regulations, working hour policies, and the diverse range of employment benefits available. From salary structures and average wages to festive holiday leave and insurance schemes, this guide equips you with the knowledge to navigate the Indonesian labor landscape effectively. Discover how to ensure compliance and attract top talent for your business needs.
Table of Contents
Minimum Wages and Working Hours in Indonesia
Working Hours in Indonesia
In Indonesia, regular working hours are 40 hours per week, either 7 hours per day for 6 working days per week or 8 hours per day for 5 working days per week.
Overtime working hours rule
Employers must pay overtime if employees work more than 7 hours in 6 working days or 8 hours in 5 working days, or if employees are required to work on weekends or public holidays. Working hours over 4 hours per day and 18 hours per week are not permitted.
|Overtime work hours
|Overtime pay calculation
|Overtime on weekdays
|1.5 times the hourly wage for the first hour and 2 times hourly way for the following hours
|Overtime on weekly holidays or public holidays:
|1. Companies with 5 working days:2 times the hourly wage for the first 8 hours, 3 times the hourly wage for the 9th hour, and 4 times the hourly wage for all hours after that. 2. Companies with 6 working days:2 times the hourly wage for the first 7 hours, 3 times the hourly wage for the 8th hour, and 4 times the hourly wage for all hours after that.
The hourly wage is calculated by multiplying 1/173 by the monthly wage.
Overtime pay is not available to employees who work as “thinkers, planners, implementers, or controllers,” and their hours cannot be regulated. However, they are usually entitled to higher pay.
After 4 hours of continuous work, all employees are entitled to a 30-minute break. Workers on a 5-day week have the right to take Saturdays and Sundays off, while those on a 6-day week have the right to take Sundays off.
At more than $300, Jakarta has by far the highest provincial minimum wage. The government sets the minimum wage for each of Indonesia’s 34 provinces. In 2022, wages will go up in Indonesia, but not by much.
*Indonesia’s Minimum Wage has been updated on January 1, 2022.
Employment benefits packages in Indonesia
Salary structure across regions
The average monthly salary in Indonesia is 12,100,000 Indonesian Rupiah, which equates to roughly $837 USD. Along with the average wage, this salary parameter takes into account benefits such as housing, insurance, and commuter compensation.
What’s an average wage?
The average wage is an employee’s base salary. Unlike the average salary, it does not include benefits such as transportation costs, medical insurance, and so on.
In other words, an average monthly wage only takes into account the compensation employees receive each month. The average monthly salary, on the other hand, includes all the benefits that workers get from their jobs over the course of a month.
And, while average wages are one of the best indicators of economic growth, they cannot be used to determine a country’s economic strength.
Other factors to consider include:
1. Median Salary
In Indonesia, the median salary is IDR 11,400,000 (USD 788).
This means that half of the Indonesian population earns more than IDR 11,400,000, while the other half earns less.
2. Salary Range
The average salary in the country ranges from IDR 3,070,000 (minimum salary) to IDR 54,200,000 (maximum salary). The lowest salary in Indonesia will be less than the lowest average, while the highest salary will be greater than the highest average.
3. Salary Percentile
The 25th percentile in Indonesia is IDR 6,520,000 (USD 450). This means that 25% of the country’s population earns less than IDR 6,520,000, implying that 75% of the population earns more than that amount.
Similarly, the country’s 75th percentile is IDR 30,800,000 (USD 2,129). In addition, the 90th percentile is IDR 99,671,317 (USD 6,916).
4. Minimum Wage
A country’s minimum wage is the lowest wage that an employer can pay an employee. This parameter varies from city to city due to changes in the cost of living, local wages, labor availability, and so on.
As a result, the minimum wage in each province of Indonesia varies. The provincial wage council, a board composed of the government, trade unions/labor unions, and employers, determines the provinces’ minimum wages.
Indonesian Average Salary Comparison
The average salary in Indonesia depends a lot on a person’s education, experience, job, and where they work.
Let us compare the average salary based on the following criteria:
A fresh graduate’s basic salary will be the lowest, as it is in other countries.
Employees with 2 to 5 years of experience typically earn 32% more than entry-level employees.
Employees with more than 5 years of experience earn 36% more than those with less than 5 years of experience.
Professionals with more than 10 years of experience earn 21% more than those with less than 5 years of experience. When an employee reaches the experience age of 15, their salary typically increases by 14% over their 10-year salary.
A worker with a certificate or diploma earns 17% more than a high school graduate.
Those with a Bachelor’s degree earn 24% more than those with a certificate or diploma. Furthermore, an employee with a Master’s degree earns 29% more than their peers with a Bachelor’s degree.
For the same job, PhD holders typically earn 23% more than Master’s degree holders.
3. Increment and Bonus
Most Indonesian employees are likely to receive an 8% salary increase every 18 months. This is high when compared to the global average of 3% every 16 months.
However, the rate of advancement varies by industry and increases with the employee experience.
Here is a list of some notable industries’ average increment rates:
Indonesian employees receive bonuses in addition to annual salary increases. 49% were given a monetary bonus ranging from 3% to 5% of their annual salary.
Employees in the marketing, architecture and sales fields receive higher bonuses than those in the construction or hospitality industries.
Because of differences in demand, the average salary for different professions varies.
Some services in the country are more important than others.
Here is a list of average monthly salaries for various professions:
The average salary in Indonesia varies by city due to varying levels of industrialization. Cities with fewer businesses have lower wages.
Here is a list of average monthly salaries in various cities across the country:
|Average Monthly Salary
|IDR 13.8 mln
|IDR 13.6 mln
|IDR 13.4 mln
|IDR 12.9 mln
|IDR 11.9 mln
Please keep in mind that these figures are averages based on salary reports from Indonesian employees, including expats. As a result, they may differ depending on factors such as experience, location, industry, and so on, and should only be used as a general guideline.
Now that we’ve seen the various average salary comparisons in Indonesia, let’s see how they compare to other countries’ average salaries.
Salary negotiations frequently refer to the offer of a net or gross monthly salary. The employer pays the employee’s income tax (PPH 21), social and health insurance (BPJS) contributions with a net payment.
The majority of Indonesian job applicants, particularly junior employees, state their expected salaries as a “take-home-pay” or a net salary.
Festive Holiday Leave (THR)
Tunjangan Hari Raya (THR) is a non-wage income that employers must pay to employees or their families prior to religious holidays in Indonesia. This THR must be paid 7 days prior to the religious holiday.
Eid al-Fitr for Muslim workers, Christmas for Catholic and Protestant workers, Nyepi for Hindu workers, Vesak for Buddhist workers, and Chinese New Year for Confucian workers are the major religious holidays in Indonesia.
Insurance and Social Security (BPJS) Types
All Indonesian residents, including expats, who have been in the country for 6 months or longer are required to obtain BPJS Kesehatan (Healthcare BPJS). The company provides BPJS to protect all of its employees.
Both the ‘Healthcare BPJS’ and the ‘Social Security BPJS’ are required. Anyone who lives in Indonesia and works for an Indonesian company must have one of the two types of BPJS. They provide various services to insurance holders.
Social Security (BPJS Ketenagakerjaan) in Indonesia
This BPJS type is required for all businesses. If you own a business, you must enrol all of your employees in ‘BPJS Ketenagakerjaan’.
Otherwise, if you work in Indonesia, your employer is required to provide you with the service of obtaining a Social Security Card. Any independent Social Security BPJS member can also register as a freelancer.
You will have basic protections for the following if you have a Social Security Card :
- JHT (Jaminan Hari Tua/Old Age Protection)
- JKK (Jaminan Kecelakaan Kerja/Workplace Accident Insurance).
- Death Protection (Jaminan Kematian).
- JP stands for Jaminan Pensiun/Pension Protection.
Healthcare (BPJS Kesehatan) in Indonesia
This BPJS type provides holders with some healthcare benefits, including:
- Basic Healthcare Provider.
- Service for Advanced Healthcare.
- Service for Hospitalization.
Employers and employees are required to contribute to these programs on a monthly basis, as a percentage of the employee’s regular monthly salary/wages. The Government of Indonesia (GOI) reserves the right to change these contributions at any time.
The mandatory contributions in 2022 are summarized below:
Understanding wages, working hours, and benefits is crucial in Indonesia’s labor market. Adhering to regulations ensures fair compensation, work-life balance, and employee satisfaction. By offering competitive wages, adhering to working hour policies, and providing comprehensive benefits, employers can attract and retain top talent while fostering a positive work environment. Compliance with these guidelines is key to success in Indonesia’s dynamic business landscape.
The views expressed in this article are the author’s own and do not reflect Talent’d’s views, opinions or policies.