Hire local talent in Indonesia is kinda tricky, especially for those of you who are quite unfamiliar with the work environment there.
Even though you are aware that there are talents who have the potential to build your company.
Indonesia has enormous talent, as an illustration, according to data fromWorldometer The current population of Indonesia is 279,467,663 with an average age of 29 years, we can assume that many of them are of productive age.
Just assumptions aren’t enough? in 2017 cabinet secretariat of the republic of indonesia released data from the president who said that Indonesia has 250 million people and 60% them are young people.
And quite in line with 2024 data from idntimes 70.72% of its population in productive age (15 to 64)
Are you compatible enough with the data?
Even though getting local talent is a bit tricky, this is very important for you to understand.
According to Royal examiner Hiring locally ensures your staff has a deep understanding of the local market, making it easier to bring in new business.
Of course, they don’t need to be introduced to the local market, because they live and grew up there, which means they have more than enough knowledge about people’s habits and how to develop your company to be more suited to society.
Image: Freepik
How Employer of Record Help Hire Local Talent in Indonesia
1. Manage the Recruitment Process before having a PT or entity in Indonesia
Employer of Record (EOR) can handle the entire recruitment process, from posting job advertisements to selection and interviews. This allows companies to focus on strategic aspects of the business without being burdened with operational matters.
You don’t even need to have a local PT or Entity before. Because your employees will be under the auspices of the Employer of Record (EOR) service
2. Access to Local Recruitment Network
Employer of Record (EOR) has an extensive local network and connections, so they can identify and attract the best talent that may not be reached by foreign companies.
3. Ensuring Compliance with Local Employment Laws
Employer of Record (EOR) understands Indonesian employment regulations, ensuring that every recruitment complies with applicable laws and avoids potential legal issues.
4. Manage Administration and Payroll
Employer of Record (EOR) handles administration and payroll, ensuring that salary and benefit payments are in accordance with local laws and industry standards.
5. Employment Contract Management
Employer of Record (EOR) can draft and manage employment contracts in accordance with Indonesian law, reducing the risk of administrative errors that could have legal consequences.
6. Cultural Knowledge and Adaptation
With local knowledge of work culture and social norms, Employer of Record (EOR) can help foreign companies adapt faster and manage their teams more effectively.
How to Understand Local Talent
To create quality local talent in Indonesia, you have to understand their point of view.
If this is marketing, then local talent in Indonesia is the people you want to target to buy your products or use your services.
So, what do workers in Indonesia like?
According to the survey Michaelpage.co.id salary is still the main factor that motivates working in Asia Pacific even though pAt the same time, 36% of respondents in Indonesia are willing to refuse a promotion if they believe it will have a negative impact on their well-being.
This means, that although salary is an interesting thing, we can see a shift in work priorities in Indonesia. Where welfare and quality of life are starting to be considered as important, if not more important, than just a salary increase.
Several things that can be elaborated on from these findings are:
1. Value Well-Being and Productivity
Employee well-being is proven to have a significant impact on productivity. According to Harvard Business School,
“We estimate a positive correlation between employee well-being and productivity, and there is a growing evidence base documenting this being a causal effect. Recent experimental evidence suggests that a meaningful increase in well-being yields, on average, an increase in productivity of about 10%”
This explains that there is a strong relationship between employee welfare and company productivity and performance. For example, employees who feel good psychologically tend to have higher productivity.
2. Employee Retention Strategy
This can also help HR to develop retention strategies that not only focus on financial incentives but also on creating a work environment that supports employee well-being. For example, by providing flexible working hours, the opportunity to work from home, or programs that support both physical and mental health.
“The global labour shortages in developed countries have made employers realise that in a world of scarce resources, employee wellbeing and retention are key factors in competitiveness.”
Of course, you don’t want your company to have a reputation for high turnover.
High turnover can harm your company’s reputation, which is crucial when it comes to attracting top talent – Stratus.hr
3. Promotion Policies
Companies may need to review their promotion policies to ensure that promotions are not just based on performance but also take employee welfare into consideration. A wise promotion should consider whether the employee is ready and able to take on greater responsibility without harming their well-being.
By understanding all these needs, you can become more attractive in the eyes of quality local talent.
Remember, hiring is an investment, so the better you understand the market, the better the local talent will be present to make your company grow.
Image: Freepik
Legal Requirements for Hiring Local Talent in Indonesia
Apart from understanding what talent wants, you also have to understand local regulations. Indonesia is a different country from your country, which means there are several different regulations regarding employees.
For example, you must understand what employee benefits and rights must be respected in Indonesia. What makes this a little complicated is that the terms will sound foreign to you.
Do you understand BPJS? Social Security Administrator which actually is program social Security.
Not to mention there are no calculations Holiday allowance or THR is a non-wage income must be paid by the employer to the employee or his family ahead of religious holidays in Indonesia, where employees will get benefits which are usually called the 13th salary.
This is written into Minister of Manpower Regulation (Permenaker) No. 6 of 2016 concerning Religious Holiday Allowances For Workers/Labourers in Companies
Abhitech has discussed Holiday Allowances here
And also other rights, for exampleTransportation Allowance, and so on.
There are also types of employment contracts such as PKWT a work agreement that binds contract employees and freelance workers.
Also, PKWTT is a work agreement that binds permanent employees which has no validity period.
Abhitech has explained the differences between PKWT and PWTT in more detail here
Plus, if you want to bring your internal team from outside to work in Indonesia then you also have to understand about visas and work permits required. Among others are RPTKA (foreign worker placement plan) and work permits.
Image: Freepik
Sourcing Indonesian Local Talent
Working with a local recruitment agency partner is the best way to find a shortcut. Because they definitely understand talent needs and regulations.
You still have to understand in general what talent needs and also the regulations you have to face. However, technically and more specifically you can submit to Abhitech.
Why Abhitech?
Because Abhitech has collaborated with many companies, both foreign and local.
We also have services to help you with Employer of Record (EoR), visa, and payroll.
This means that, simply with Abhitech all your needs as a company can be completed.
If you want to work with Abhitech, you can contact us here.
