Indonesian workers are growing more concerned about their shrinking take-home pay as salary deductions continue to rise. The upcoming implementation of the Tabungan Perumahan Rakyat (Tapera) program in 2027, along with mandatory vehicle insurance, is adding to their worries. According to the Central Statistics Agency, the average salary for Indonesian workers in February 2024 was approximately IDR 3.04 million or SGD 255.
Average Salaries in Indonesia (February 2024)
Agriculture, Forestry, and Fisheries : Rp.2,236,045
Mining and Quarrying : Rp.4,944,886
Manufacturing : Rp.3,026,413
Electricity, Gas, Steam/Hot Water Supply : Rp.4,853,131
Water Treatment and Waste Management : Rp.2,692,899
Construction : Rp.2,945,227
Wholesale and Retail Trade; Vehicle Repair : Rp.2,544,248
Transportation and Warehousing : Rp.3,631,764
Accommodation and Food Services : Rp.2,240,980
Information and Communication : Rp.4,736,936
Financial and Insurance Activities : Rp.5,154,872
Real Estate : Rp.4,313,920
Professional and Business Services : Rp.3,725,742
Public Administration and Defense : Rp.3,670,645
Education : Rp.2,843,321
Human Health Activities and Social Work : Rp.3,350,737
Other Services : Rp.1,744,402
Average : Rp.3,040,719
From this average salary data, Indonesian workers face seven types of deductions, ranging from income tax (PPH 21) to the upcoming Tapera program.
Singaporean Workers Benefit from Higher Salaries with Fewer Deductions
In stark contrast to Indonesia, workers in Singapore earn an average monthly salary of SGD 5,197 (approximately IDR 62.17 million) before deductions for the Central Provident Fund (CPF) and income tax. In Singapore, only three main salary deductions apply: income tax, CPF contributions, and Medisave.
Comparison of Salary Deductions Between Indonesia and Singapore
Indonesia: PPH 21, Tapera (upcoming), insurance = Rp. 3,040,719
Singapore: Income Tax (PPH), CPF = Rp. 62,170,000
Implications of Tapera for Indonesian Workers
The Tapera program requires all workers to contribute 3% of their salary—0.5% covered by employers, with the remaining 2.5% deducted from employees’ wages. This regulation is set to take effect by May 2027. Government officials, including Moeldoko and Basuki Hadimuljono, emphasize that this initiative is intended to address housing shortages, which affect nearly ten million Indonesians lacking adequate homes.
Although the program has commendable goals to help low-income families secure homes through collective savings, many workers worry about its impact on their already tight financial situations. The introduction of Tapera is expected to further diminish disposable income at a time when many are grappling with rising living costs.
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Conclusion: A Contrast in Economic Realities
The disparity between salaries and deductions for Indonesian and Singaporean workers highlights significant economic differences within the region. While Singaporean employees benefit from higher wages with minimal deductions that enhance financial freedom and stability, Indonesian workers face increasing deductions that jeopardize their purchasing power.
For both local residents and international visitors considering job opportunities in these countries, understanding these dynamics is essential for making informed decisions about work-life balance and financial planning.
Indonesian workers are facing increased salary deductions due to the upcoming Tapera program set for implementation in 2027. In contrast, Singaporean workers enjoy higher salaries with fewer deductions. This disparity underscores the economic challenges faced by Indonesian employees as they navigate a shifting financial landscape.
Sources: CNBC Indonesia, Kontras Aceh (2024)
