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Recruitment and Hiring Market in Indonesia

Recruitment and Hiring Market in Indonesia Review by Michal Wasserbauer on 25. 7. 2014 Company Registration in Indonesia, Market Research in Indonesia, Work Permit in Indonesia, Product Registration in Indonesia, Local Partner Selection in Indonesia, Trade Mission in Indonesia, Company Formation in Indonesia, Company Establishment in Indonesia, Company Set Up in Indonesia, Payroll Outsourcing in Indonesia, Tax Reporting in Indonesia, Medical Product Registration in Indonesia, Medical Device Registration in Indonesia, Cosmetic Registration in Indonesia, Food Supplement Registration in Indonesia.
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Foreign Worker Recruitment Process for PMA in Indonesia

The process of recruiting foreign labor for a PMA is quite a bit more complicated than local labor. Based on Law Number 13 Year 2003 concerning manpower, employers are prohibited from employing foreigners without written permission from the Ministry of Labor and Immigration (Depnakertrans). This process consists of filling out a Request Legalization of Foreign Manpower Utilization Plan (RPTKA) submitted to the Ministry of Labor and Immigration or a designated official. After RPTKA is legalized, the Ministry of Labor and Immigration will issue a permit to hire foreign workers (IMTA). To get the RPTKA, an employer (PMA) needs to submit a written application together with the reason for using foreign labor. The complete requirements are as follows:

• Completed RPTKA form
• Business license from the competent authority
• Incorporation certificate as a legal entity that has been approved by the competent authority
• Domicile letter of the company from the local government
• Organization structure of the company
• A letter of appointment as a companion of migrant foreign workers employed
• A copy of proof required to report employment valid under Law No. 7 of 1981 on Report Obligatory in the company and
• Recommendation of positions that will be occupied by foreign workers from certain agencies if necessary

Local Manpower Recruitment Process for PMA

The easiest way for a PMA to recruit local labor is by using a staffing or jobseeker agency such as jobstreet.com, jobsdb.com, etc. A staffing agency is a kind of company that provides services to the PMA for recruiting workers based on the requirement. A staffing  agency will help the PMA in the following matters:

• Preparation of applicants ads to find possible candidates
• Assess administration to identify the minimum requirements. The staffing agency will assess compliance with minimum requirements such as education, experience, competence, etc., based on the requirements for the position.
• The selection process, both written and verbal
• Provide recommendations to the PMA on suitable candidates to be hired

Cekindo,  as a market entry consulting firm, also provides you with recruitment and HR establishment services for your company  to support the overall business strategy. HR recruitment plays a major role in setting up strategic capabilities and functional expertise. In Indonesia, special attention is required to find suitable channels for recruit qualified employees. Cekindo has extensive networks and databases to provide professional services to foreign entities and entrepreneurs in establishing an initial team in Indonesia, as well as expanding a team as the result of business growth. Cekindo provides recruitment for employees as well as headhunting for managerial positions. By leveraging our extensive experience and network of contacts, our consultants will fully understand your hiring needs and employment conditions and will deliver the expected human resources, from promotion, screening, through conducting pre-interviews.

Employment Potential in Indonesia

According to the Central Statistics Agency (BPS), the labor force in Indonesia  had reached about 121.2 million by February 2013. The number of Indonesian workers holding qualifications from elementary schools (SD) and below, is 52 million people (46.93 percent) or nearly half of the total number of workers. Workers who are Junior High School (SMP) graduates make up a total of 20.5 million people (18.5 percent), while high school graduate workers (SMA) totaled 17.84 million people (16.1 percent). University graduates form the lowest number of workers at 7.57 million people (6.83 percent) and those with a diploma totaled 2.92 million people (2.63 percent).

Need more insight? You might want to read: Doing Business in Indonesia: Hiring or Outsourcing?


Provincial Minimum Wage (UMP) 2014

The following provinces set a minimum wage in 2014:

• South Kalimantan: IDR 1,620,000
• Batam: Rp 1.325 million
• Central Kalimantan: USD 1.72397 million
• West Kalimantan: Rp 1,380,000
• Jambi: Rp 1.5023 million
• Southeast Sulawesi: Rp 1.400.000
• West Sumatra: increased 10.37 % to Rp 1.49 million
• Bangka Belitung: Rp 1.64 million
• Papua: Rp 1.900.000
• Bengkulu: Rp 1,350,000
• NTB: Rp 1.21 million
• Jakarta: Rp 2,441,301
• Riau Islands: Rp 1.665 million
• Riau: Rp 1,700,000
• North Sumatra: Rp 1,505,850
• East Kalimantan: Rp 1,886,315

The Rupiah exchange rate against the USD is 1US $ = Rp . 13,000, so that the average minimum wage in the Indonesian provinces averages less than $100 per month.

The Benefits of Using Local Manpower

According to national regulations, foreign workers should only be used for jobs that require special skills that cannot be done by local labor. A PMA should use local labor whenever possible. Some advantages of using local labor are as follows:

• Understand the local culture so it is easy to adapt and communicate in their environment
• The cost of labor is much cheaper than foreign labor
• More loyal to the company
• The recruitment process is easier than for foreign labor