Manufacturing Workers in Indonesia: Hiring and Compliance Guide

Demand for manufacturing workers in Indonesia continues to rise as the country strengthens its position in regional production, directly influencing hiring strategies. Manufacturers now operate in a labor market shaped by tighter regulations, specialized skill requirements, and increasing competition for dependable manufacturing labor, making proactive recruitment essential. 

Instead of simply hiring workers, companies must navigate compliance rules, recruitment challenges, and evolving workforce expectations. This article breaks down Indonesia’s manufacturing landscape, the obstacles employers face, and how companies can secure reliable industrial talent. 

Indonesia’s Manufacturing Workforce Landscape 

Indonesia’s manufacturing sector recorded 5.58% growth in Q3 2025, surpassing the national rate of 5.04% and contributing 1.04 percentage points to total GDP. This growth is driven by stronger exports and increasing investment, creating steady demand for experienced manufacturing workers. Key industry indicators include: 

• 12.56% year-on-year growth in manufactured exports 
• IDR 562.7 trillion (USD 36 billion) invested in manufacturing (Jan–Sept 2025) 
• 20.31 million workers employed 
• 210,000 new jobs created within six months 
• 59.28% factory utilization, showing room for expansion 

These figures show why companies are competing for reliable manufacturing labor and why a well-prepared hiring approach is increasingly important.

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What Companies Must Prepare Before Recruiting Manufacturing Workers 

Before manufacturers begin hiring manufacturing workers, they must secure several compliance foundations required under Indonesian labor law, as failure to do so can cause delays. Below are the essential requirements adapted for the manufacturing environment to ensure smooth recruitment processes. 

Mandatory Manpower Report (WLKP) 

Manufacturing companies must file the Wajib Lapor Ketenagakerjaan Perusahaan (WLKP) with the local Ministry of Manpower (Disnaker) before any recruitment activity begins. 

Failing to file the WLK may trigger administrative sanctions and complicate labor inspections, disrupting production schedules and delaying hiring. 

BPJS Employment & Health Registration 

Manufacturing involves physical labor, equipment handling, and shift-based work. This makes BPJS Ketenagakerjaan and BPJS Kesehatan even more essential. 

Delayed registration or misreported wages can lead to heavy penalties and legal consequences, particularly serious if a workplace accident occurs. 

Employment Contract (PKWT and PKWTT) 

Before hiring, manufacturers must decide whether roles fall under PKWT (fixed-term) or PKWTT (permanent) contracts. Misclassifying long-term roles as PKWT can legally convert the arrangement to PKWTT, creating unexpected severance obligations that are costly for factories with large headcounts. 

Company Regulation 

Manufacturers typically exceed this threshold quickly. The company regulation must be drafted and ratified by the Ministry of Manpower. Since factories operate with strict protocols, regulations become the backbone of workforce management. 

Without a ratified regulation, disputes default to government regulations, which are often less flexible and less tailored to manufacturing workflows. 

Job Descriptions Aligned with KBLI Codes 

Each role must have a formal job description that aligns with the company’s registered KBLI code under the NIB. Misaligned or vague job descriptions may cause issues during labor audits, tax inspections, or permit renewals, affecting production continuity.

Common Recruitment Challenges in Manufacturing 

Recruiting dependable manufacturing workers has become increasingly complex as the industry faces significant demographic and skills-related pressures. Two challenges stand out across the sector. 

Workforce Shortage 

Many manufacturing companies are facing challenges as more experienced workers approach retirement. This makes it harder to retain key knowledge within the company and maintain stable operations. Some common issues include: 

• Fewer experienced workers are available 
• Difficulty passing skills from senior staff to newer employees 
• Gaps in workflow and long-term planning 

To address this, hiring teams must focus on improving knowledge sharing, planning for future staffing needs, and expanding their recruitment efforts to build a more stable, balanced industrial workforce. 

Shortage of Skilled Personnel 

Even with active recruitment efforts, many companies struggle to find candidates with the technical skills required by modern manufacturing. Today’s production environment depends on abilities in: 

• Automation 
• Data analytics 
• Advanced production technologies 

This shift has created a growing mismatch between what employers need and the qualifications most applicants bring. As a result, companies often end up hiring less-prepared candidates, increasing training time and slowing down manufacturing recruitment. 

How Employer of Record (EOR) Supports Manufacturing Recruitment 

An Employer of Record (EOR) helps manufacturers manage the administrative and HR requirements involved in hiring new manufacturing workers, especially in global or fast-growing operations. While the company still supervises daily work, the EOR handles essential employment functions. An EOR typically manages: 

• Employee contracts 
• Compliance with local labor laws 
• Tax payments and reporting 
• Accurate and timely payroll 
• Employee benefits administration 

By taking over these time-consuming HR responsibilities, an EOR reduces operational pressure and allows manufacturers to focus on production, training, and workforce expansion. This makes it easier to strengthen manufacturing recruitment while staying fully compliant.

Simplify Your Manufacturing Recruitment with InCorp 

Indonesia’s manufacturing sector is growing quickly, but challenges in workforce availability, skills, and compliance remain. Companies that prepare well and understand local requirements can hire more efficiently and maintain stronger operations.  

When internal capacity is limited, using an Employer of Record (EOR) can help manufacturers remain compliant and build a stronger, more stable workforce. 

InCorp Indonesia (an Ascentium Company) can assist companies by offering practical, compliance-focused support in areas such as: 

• Compliant employment contracts and onboarding 
• Payroll and tax administration for accurate and timely processing 
• Employee benefits and insurance support 
• Compliance guidance and risk mitigation 
• Visa and work permit assistance for foreign specialists 

Fill out the form below to efficiently build and manage your manufacturing workforce in Indonesia.

Frequently Asked Questions