Cost to Hire in Surabaya: What Employers Need to Know

Hiring in Surabaya involves more than just paying a salary. The cost to hire includes employee salary, taxes, employee benefits, and legal compliance under labor law in Indonesia. Knowing all the costs upfront is key if you’re planning to grow your team in this busy business hub. 

This guide breaks down every layer of hiring expenditure, from minimum wage regulations to leveraging an Employer of Record (EOR), giving you a crystal-clear roadmap to hiring success.  

Key Cost Components of Hiring in Surabaya 

Understanding the real cost of hiring in Surabaya means going beyond salary numbers. Employers must consider both direct and hidden expenses. Here are five major components that shape the total hiring cost in Indonesia: 

Salary and Mandatory Bonuses 

The core cost begins with the gross employee salary, which varies by industry, experience, and job role. In Surabaya, wages are often competitive in the tech, logistics, and engineering sectors. Employers must provide a Religious Holiday Allowance (THR)—a mandatory annual bonus equal to one month’s salary, typically paid before major religious holidays—along with salary. 

Social Security Contributions (BPJS) 

Indonesia mandates employer contributions to social security programs: 

• BPJS Kesehatan (Health Insurance): 4% of salary paid by the employer 
• BPJS Ketenagakerjaan (Employment Benefits): Between 6.24% and 9.54% based on job risk level 

These statutory contributions can significantly add to the cost of hiring in Surabaya. 

Legal Obligations and Employee Entitlements 

Employers must comply with various legal obligations under the labor law of Indonesia, including: 

• Leave Entitlements: Paid annual leave, sick leave, maternity leave, and national holidays 
• Severance Pay: Compensation upon termination can range from 1 to 9 months’ salary based on tenure and contract terms 

These requirements are non-negotiable and directly affect your hiring budget. 

Recruitment, Training, and Onboarding 

Attracting and preparing a new employee comes with its own set of costs: 

• Recruitment: Advertising jobs, using headhunters, and screening candidates 
• Training and Onboarding: Tools, courses, and internal resources needed to get new hires up to speed 

Though often overlooked, these steps are crucial to the overall hiring cost. 

Payroll, Admin, and Compliance Costs 

Running payroll in-house requires time, staff, and software. Many companies now use payroll outsourcing in Indonesia to manage this process more efficiently. This reduces costs and helps avoid penalties for non-compliance with tax or labor laws. 

In addition, legal and accounting support is often needed to draft compliant contracts and manage filings, increasing total employment expenses. 

READ MORE:

• Employer of Record: The Solution to Hiring Challenges 
• The Advantages of Using an Employer of Record for IT Hiring 
• Top 10 Benefits of Hiring an Employer of Record for Your Company 

Get Deeper Insights with Our Indonesia Salary Guide 

Want deeper insight into industry-specific pay ranges and total employee costs? 

Download our 2025 Salary Range Report for comprehensive salary benchmarks, benefit breakdowns, and hiring tips specific to the Indonesian market. Whether you’re budgeting for a new hire or planning for long-term expansion, our eBook is your essential reference for: 

• Average salaries by role and sector 
• Standard employee benefits and legal obligations 
• Hidden costs that many employers overlook 
• Cost-saving tips using payroll outsourcing and EOR solutions 

How Much Does It Cost to Hire One Employee in Surabaya? 

When hiring in Surabaya, employers must budget beyond the base employee salary. Indonesia’s employment regulations require businesses to cover a range of statutory costs that increase the total cost to hire. 

Let’s say you plan to hire someone with a monthly base salary of IDR 10,000,000. Here’s how the real hiring cost breaks down: 

Hiring one employee in Surabaya at IDR 10 million/month can cost around IDR 11.93 million/month after statutory contributions and bonuses. Depending on job type and risks, the total hiring cost in Indonesia typically ranges from 115% to 130% of the gross salary. Understanding this full breakdown ensures better financial planning and compliance with labor law in Indonesia. 

How EOR and Payroll Outsourcing Can Reduce Hiring Costs 

Managing employees in Surabaya requires strict compliance with Indonesian employment laws, accurate payroll processing, and handling statutory benefits. For many businesses, this process is complex, time-consuming, and expensive.  

That’s where Employer of Record (EOR) and payroll outsourcing services come in. Here are five ways these services reduce your overall hiring cost in Indonesia: 

• No Local Entity Needed: Hire in Indonesia without setting up a company, saving on setup costs. 
• Accurate Payroll: EOR can handle salaries, taxes, and BPJS contributions. 
• Full Legal Compliance: Stay current with labor law in Indonesia and avoid costly penalties. 
• Simplified HR: EORs manage contracts, onboarding, and terminations for you. 
• Predictable Monthly Fees: All costs are bundled, making hiring more transparent and budget-friendly. 

InCorp Indonesia (an Ascentium Company) can build your Surabaya team quickly, legally, and efficiently. Whether hiring locally or expanding remotely, EOR services help reduce hiring costs while remaining fully compliant. 

Complete the form below to hire in Surabaya and reduce your hiring costs while remaining fully compliant. 

Frequently Asked Questions