Recruitment in Indonesia: Understanding the Labor Situation and Recruitment Process

Recruitment in Indonesia is pivotal in supporting business growth and success for newly established foreign companies, known as PT PMA. This article delves into Indonesia’s labor landscape nuances and offers valuable insights to effectively attract and hire local talents for your company’s growth.

Understanding the Indonesian Labor Situation

Indonesia’s demographic advantage is striking, with a population exceeding 255 million, of which 66.5% fall within the productive age bracket of 15-60 years. The youthful median age of 28.2 years indicates a vast potential workforce eager to contribute to the country’s economic sectors.

The labor force participation rate, at 65.76% (approximately 169.6 million individuals in 2015), highlights the significant labor pool. Minimum provincial wage standards vary between IDR 2,700,000 to IDR 4,000,000, with higher-skilled positions commanding at least IDR 5,000,000, contingent on location, expertise, and tenure.

Challenges in the Indonesian Labor Landscape

Two key challenges confront PT PMAs seeking to harness Indonesia’s labor potential:

1. Geographical Disparity

Skilled and talented workers are often concentrated in major cities like Jakarta, Surabaya, Semarang, and Bandung, posing a distribution imbalance across the country.

2. Human Development Index

Indonesia’s lower Human Development Index (HDI) of 0.617 relative to global and regional benchmarks affects the overall quality of its labor force. This calls for meticulous selection to secure the best candidates from the abundant talent pool.

The Process of Recruitment Indonesia

PT PMAs can embark on the recruitment journey through in-house efforts or outsourcing the task to third-party experts. Irrespective of the chosen approach, the recruitment process typically involves the following stages:

1. Launching job vacancy ads

Promote openings through diverse media campaigns, including reputable ones. Boost credibility by featuring job ads on your company’s website. This step will increase the awareness of the potential candidates.

2. Reviewing all the requirements

Precisely outline role-specific criteria before making job ads public. This ensures efficient shortlisting when the influx of applications occurs.

3. Conducting the selection process

Employ written and/or oral tests to evaluate shortlisted candidates. While resource-intensive, this phase is pivotal in identifying.

4. Providing recommendations to the end-user

After rigorous selection processes, present the cream of the crop to the end-user (company or department) for final selection.

Since the recruitment process is an overwhelming task for any company, many prefer to outsource the duty to a third party with credibility. As a market entry consulting firm, InCorp Indonesia also provides this service for PT PMA.

With years of experience in this field plus a wide-ranging network it has to fully manage the recruitment and HR establishment for PT PMA, we will put our best efforts and resources to ensure that your company will have the best selection of candidates that will suit your company’s needs.

In addition, our exceptional knowledge of Indonesia, Indonesian culture, working environments, workers’ characteristic, minimum regional base salary, and other local resources make InCorp Indonesia stands out as one of the leading PT PMA consulting firms in Indonesia.

It enables us to provide the best local manpower with world-class qualifications that will support your team. It means you will be equipped with qualified workers who understand the local business systems and cultures but can play and compete well in the global setting.

Recruitment Indonesia: Required Documents and Permits for Hiring Foreigners

In terms of hiring foreigners, recruitment in Indonesia has strict regulations that should be followed. A PT PMA is not allowed to engage foreigners without obtaining a special permission letter from The Ministry of Labor and Immigration and other essential documents signed by several government authorities under the Ministry.

InCorp Indonesia will assist you in getting the required documents and legalization for both your company (that employs the expatriate) and the expatriate candidates, including:

The RPTKA (The Foreign Manpower Utilization Plan) from The Ministry of Manpower

There are five types of RPTKA which you foreign workers can obtain, such as:

1. General RPTKA

It is a common RPTKA for expats. The holders of this RPTKA can extend the license after five years.

2. Temporary RPTKA

This will be issued for a maximum period of 6 months and cannot be extended. Usually, workers must come to Indonesia for temporary jobs such as machinery installations of maintenances, trial product assistance, sales, or services.

3. Emergency RPTKA

This is a permit issued for emergency work situations, such as things that should be done, fixed, or addressed immediately in your company so that it will not potentially harm the existence of the company or the general public. This RPTKA can be issued for a maximum period of 1 month and cannot be extended.

4. Exclusive Economic Zone RPTKA

There is no time restriction for this RPTKA.

5. Impresario Service Business RPTKA

This RPTKA is given to any expats who want to manage or organize amusement activities in Indonesia. There is no time restriction for this RPTKA.

Visa for Expatriates

Next, the RPTKA holders must apply for TA01 (Approval Recommendation Visa) to get Indonesia Work Permit (RPTL).

Permanent Residence Permit (KITAP)

This is for any expat who applies for a permanent resident permit. The KITAP is given for maximally 1 year and can be extended afterward.

This is an overwhelming process if it is not done by an experienced agent who understands Indonesia’s legal and bureaucratic systems—considering that there are many forms to be filled out and so many documents to be prepared. You need to be careful to conduct the whole process if you want to recruit legally and this is based on Indonesian Labor Law.

InCorp Indonesia will give you more information and assistance related to Indonesia’s recruitment and hiring process. Feel free to contact us through the form below.