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Basic Economic Summary


Continuing the trends from previous years, e-commerce and digital continues to be major drivers of hiring activity. This has been driving high demand for skilled technology and digital talent, particually for those able to showcase commercial ability and digital acumen. The top skills that are in demand include machine learning, big data and artificial intelligence. (Robert Walters 2020 salary guide)

Basic Information

  • Local Languages: Bahasa Indonesia (Official)
  • Capital: Jakarta
  • Major Economic Hubs: Jakarta, Bandung, Central Java (Surabaya, Semarang, Yogyakarta).
  • Currency: Indonesian Rupiah (IDR)
  • Population: 273.52 million (2020)
  • Time Zone: UTC+7 to +9 (various)
  • Date Format: dd/mm/yyyy

Useful Information

  • GDP Per Capita (in USD): $4,224
  • Exchange Rate (IDR/USD): 0.000070
  • PISA Ranking: 71

Local Universities

Renowned Local Universities:

University Description
University of Indonesia Rank in Indonesia: 1

World Rank: 752

Universitas Gadjah Mada Rank in Indonesia: 2

World Rank: 852

IPB University / Bogor Agricultural University Rank in Indonesia: 3

World Rank: 1092

Institut Teknologi Sepuluh Nopember Rank in Indonesia: 4

World Rank: 1103

Further details on the universities in Indonesia can be found on Webometrics.

Salary Data

Job TitleAverage Salary Range (IDR)Average Salary Range (USD)
Accounting & Finance Manager20-33m1413-2331
Sales Manager33-55m2331-3886
Marketing Manager33-55m2331-3887
Software Developer15-40m1060-2826
UI/UX Manager33-55m2331-3886
Product Manager60-70m4239-4945
Data Analyst11-27m777-1907

More information about average salaries in Indonesia can be found on Salary Explorer.

15-30% salary rises are expected for job movers in 2020. For those remaining in a role, 10% expect a 0-6% annual salary increment, 64% expect a 7-15% annual salary increment while 26% expect a 15%+ annual salary increment.

Talent Sourcing Tips

English Proficiency: Low Proficiency

Number of LinkedIn Users (2021): 18.86 million

Top Local Job Portals: Indeed, Jobindo.com, JobStreet.com

More information about job portals in Indonesia can be found here.

Top Recruitment Agencies: Michael Page Indonesia, Alliance Recruitment Agency, Robert Walters Indonesia


Employer Payroll Tax

Type of TaxContribution (%)
Public housing savings (Tapera)0.50%
Occupational accident insurance0.24% – 1.74%
Life insurance0.30%
Old age benefits3.70%
Pension plan2.00%
Health Insurance4.00%

Maximum calculation base is IDR 12 million/month starting 1 January 2020.

The employer is also expected to pay the employee withholding tax. Links to the public housing savings and social security scheme.

Employee Payroll Tax

Type of TaxContribution (%)
Old age insurance2%
Pension plan1%
Health Insurance1%

Employee Monthly Income Tax

Net Taxable Income (IDR)Contribution (%)
Up to IDR 4,166,666.675.00%
Above IDR 4,166,666.67 to IDR 20,833,333.3315.00%
Above IDR 20,833,333.33 to IDR 41,666,666.6725.00%
Above IDR 41,666,666,6730.00%

Indonesia follows a progressive income tax model. Links to employee payroll tax and employee income tax.

Monthly Severance Payments Tax

Taxable Amount (IDR)Tax rateTax (IDR)
< 4,166,666.670%0
4,166,666.67 to 8,333,333.335%208,333.33
8,333,333.33 to 41,666,666.6715%5,000,000
> 41,666,666.6725%25% of the relevant amount

The source for the severance payments tax can be found here.

Minimum Wage & Payroll

Minimum Wage

Rp 1,742,000 to Rp 4,200,000 depending on the province.

Payroll Cycle

Paid weekly, bi-weekly, or monthly depending on employment contract.


13th month salary a.k.a Tunjangan Hari Raya (THR) payment

THR is a yearly bonus given to employees at least one week before the start of the religious holiday observed by the employee (based on the employee’s religion), equivalent to one month’s salary (based on the period of employment).

Recognized religious holidays: Eid-il-Fitri for Muslims, Christmas for Catholics and Protestants, Nyepi for Hindus, Vesak for Buddhists, and Chinese New Year for Confucianism.

If the employee has been working for more than 12 months, they are entitled to 1 month’s salary. Otherwise, the THR is pro-rated according to months of service (service period/12) x 1 month’s salary.

Employee Stock Options

There is no provision or regulation for employee stock option benefits in Indonesia, and it is not common in Indonesia for employees to be offered participation in an employee share plan. 

However, as stated in Law 13 under Manpower Law 2003, there must be an internal agreement between the company and the relevant employee regarding the employee stock option plan that clearly regulates the rights and obligations of the parties.

Learn more about ESOP procedures in Indonesia here.

Working Hours & Statutory Leave

Maximum working hours

For 5 days work week: 8 hours per day and 40 hours a week

For 6 days a week: 7 hours a day and 40 hours a week

These working hours rules do not apply to certain businesses and are usually regulated with a Ministerial decision.

Maximum overtime hours

Employees are not permitted to work more than 3 extra hours a day and 14 extra hours per week.

Overtime pay

Period of overtimeHourly salary paid (%)
Weekdays, 1st hour150%
Weekdays, subsequent hour200%

Employees who hold high-level positions and whose working time cannot be restricted by hours are not eligible to receive overtime pay.

Work-on-rest-day and Public Holiday pay

5 day work week
Period of OvertimeHourly Salary Paid (%)
Weekly rest day or public holiday, 1-5 hours200%
Weekly rest day or public holiday, 7-8 hours300%
Weekly rest day or public holiday, 6th hour400%
6 day work week
Period of OvertimeHourly Salary Paid (%)
Weekly rest day (weekdays) 
Weekly rest day or public holiday, 1-7 hours200%
Weekly rest day or public holiday, 8th hour300%
Weekly rest day or public holiday, 9-10 hours400%
Weekly rest day (weekends) or public holiday 
Weekly rest day or public holiday, 1-7 hours200%
Weekly rest day or public holiday, 8th hour300%
Weekly rest day or public holiday, 9-10 hours400%

Public Holidays

The 15 public holidays can be found here.

Annual Leave

Employees are entitled to a total of 12 days of annual paid leave.

Sick Leave

Sick leave is not deducted from the number of annual leave.

Duration of AbsencePercentage of Usual Salary
Menstrual Leave (1st & 2nd days of menstruation)100%
First 4 months100%
Second 4 months75%
Third 4 months50%
Subsequent months25%

Parental Leave

Maternity Leave

The employee is entitled to 1.5 months of paid leave prior to the delivery, and another 1.5 months of paid leave after the delivery. The length of maternity leave can be extended if there is a medical recommendation.

Paternity Leave

Employees working in the private sector are entitled to 2 days of paid leave excluding their annual leave.

Paid Personal Leave

Type of LeaveDuration of Leave (Days)
Worker’s marriage3
Worker’s child’s marriage2
Worker’s son’s circumcision2
Worker’s child’s baptism2
Worker’s wife giving birth or having a miscarriage2
Death of worker’s close family members (spouse, child, in-laws, parents)2
Death of worker’s extended family1

Offboarding & Termination

Termination Process

There is no notice of termination in Indonesian law. However, if a company wants to terminate its employees, it has to obtain approval from the Industrial Relations Court (IRC) by filing a lawsuit, or if they signed a Mutual Termination Agreement, then the Mutual Termination Agreement should be registered with the IRC.

The Labor Law prohibits an employer from dismissing an employee for the following reasons:

  1. The employee joins in matrimony;
  2. The employee is absent due to illness for less than 12 months consecutively;
  3. The employee performs a role in a trade union.

Notice Period

Does not require a notice period for employers.

Employees must give one month’s notice when they decide to leave employment.

Severance Pay

Depending on the reasons for employment termination, employers need to pay standard severance, long service pay, compensation pay, and/or separation pay

Duration of employmentWage paid (months)
< 1 year1 month
< 2 years2 months
< 3 years3 months
< 4 years4 months
< 5 years5 months
< 6 years6 months
< 7 years7 months
< 8 years8 months
≥ 8 years9 months

Probation period

Not mandatory. 3 month probationary periods are permitted for employees on indefinite contracts, but cannot impose probationary period on employees on a fixed-term contract.


It is mandatory for employers to provide healthcare insurance in Indonesia. The insurance premium must be 5% of their salary wherein 1% is paid by the employee and 4% is paid by the employer. 

If an employee has been working in Indonesia for at least 6 months, the employer must provide health insurance. The scope of employee health insurance in Indonesia extends to the immediate dependents of the employee. 

Learn more about insurance benefits in Indonesia here.


The standard VAT rate has traditionally been 10% in Indonesia.

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