Hiring & Employment in Indonesia: 2025 Guide
Your guide to the employment landscape, working customs and local labor laws in Indonesia.
Capital / Economic hubs
Jakarta (capital), Surabaya, Bandung
Currency
Indonesian Rupiah (IDR)
Official Language
Indonesian (Bahasa Indonesia); English used in business
Key Industries
Oil & gas, mining, palm oil, manufacturing, digital economy, finance
Business Climate Overview
Indonesia, Southeast Asia's largest economy, combines a vast domestic market, growing digital sector, and abundant natural resources. The government continues to attract foreign investment through infrastructure projects and incentives in manufacturing, renewable energy, and technology.
Talent Market & Recruitment
Workforce
~148M workforce; young, growing, with skill gaps in specialized areas; unemployment at 4.8%.
In-demand Roles
- • Software engineers
- • Data analysts
- • Cybersecurity experts
- • Engineers (EV/mining)
- • Finance professionals
- • E-commerce professionals
Hiring Channels
JobStreet, LinkedIn, Kalibrr, referrals, campus hiring, local recruitment agencies.
Employment Regulations
Written Contracts
Mandatory, especially for fixed-term contracts; must be in Bahasa Indonesia (English optional).
Probation Periods
Maximum 3 months; only for permanent roles (none allowed for fixed-term contracts).
Public Holidays (2024)
17 national holidays + collective leave days (e.g., Eid, Christmas, Independence Day).
Annual Leave
Minimum 12 paid days per year after one year of continuous service.
Termination & Severance
Severance required; formula based on tenure as per Manpower Law. Disputes may involve industrial relations courts.
Compensation, Tax & Social Security
Overtime Pay
1.5× hourly rate for the first hour, 2.0× thereafter; maximum 14 overtime hours per week.
Employer contributions:
~10–12% (healthcare, pension, accident, death insurance).
Employee contributions:
~4–5% (pension and health).
Personal Income Tax
Progressive rates from 5% to 35%.
Bonuses
THR (religious holiday bonus) is mandatory; other bonuses (performance, annual) are discretionary.
VAT
11% standard rate.
Salary Benchmarks by Industry
| Industry / Role | Salary Range |
|---|---|
| Software Engineer | IDR 20M |
| Backend Developer | IDR 30M |
| Digital Marketing | IDR 22M |
| Mechanical Engineer | IDR 29M |
| Recruiter | IDR 21M |
| Financial Analyst | IDR 25M |
| Designer | IDR 18M |
| Nurse | IDR 6M |
| Estate Agent | IDR 14M |
| Sales Director | IDR 30M |
Payroll & Immigration
Payroll Cycle
Monthly (typically paid on the 25th or month-end).
Work Permits
RPTKA approval → Work Visa (KITAS). Typical ratio: 10 local employees per 1 foreign worker.
Options for Hiring in Indonesia
Employer of Record (EOR)
Fastest onboarding route; provider manages compliance, payroll, and permits.
Local Payroll Providers
Handle payroll, tax reporting, and contributions for entities.
Independent Contractors
Permitted; ensure project-based scope to avoid misclassification.
Local Entity Setup
PT PMA company structure allows direct hiring; setup takes 3–6 months with required licenses and directors.
Ready to expand your team in Indonesia?
Let HYRED guide you through the complexities of hiring in Indonesia with our comprehensive employment solutions.