Social Insurance in Indonesia

With an ever-growing workforce and evolving labor market dynamics, the implementation of social insurance schemes has significant implications for businesses operating in the archipelago nation. All employees in Indonesia, including expatriates and their families, must mandatorily participate in the National Social Security System (Sistem Jaminan Sosial Nasional or "SJSN").  Social security programs in the country are run by two organizations – the Social Security Administrator for Health (BPJS Kesehatan) for healthcare and the Workers Social Security (BPJS Ketenagakerjaan) for socio-economic protection.

This guide explores: 

Overview of social security rates

Workers Social Security Scheme

Areas Covered

% of monthly wages


Employer contributions

Employee contributions

Life insurance



Accident insurance

0.10 – 1.60%


Old age benefits



Pension plan






Five percent of an employee’s monthly salary will go towards paying for the healthcare premium, with a salary cap of 12 million rupiahs (US$821) while the maximum salary used as the basis for the calculation for other premiums is capped at six months’ salary of 5 million rupiahs (US$319).

Social security scheme

The BPJS Ketenagakerjaan program, or social security scheme, is mandatory for all businesses, and employers must register their employees.

The social security scheme covers the following:

  • Accident compensation – provides protection for accidents occurring during or as a result of work;
  • Old age benefits – provides protection for participants that are in retirement, laid off;
  • Pension benefits – provides guaranteed income in retirement; and
  • Life insurance – upon the death of the participant, their heirs can claim the benefits.

Did You Know
Under Government Regulation 37 of 2021 (GR 37/2021), the government has introduced a new unemployment benefit program Job Loss Security Program (JLS), — the first of its kind in the country.

The JLS scheme does not provide universal coverage as only employees who are already registered with the Workers Social Security program will be eligible. Employees who have been made redundant and are eligible for unemployment benefits will receive cash stipends for up to six months, further skills training, and career guidance information.

Employers will contribute 0.46 percent of their monthly wages to the JLS program, in which 0.22 percent is contributed by the government and the remaining 0.24 percent from the employer.

The employer’s contribution is taken from the re-composition of the life insurance and work compensation components of the pension program.

What are the benefits of the program?

The program offers participants a cash stipend - the participant can receive 45 percent of the monthly wage (capped at 5 million rupiah (US$319)) for the first three months, and then 25 percent for the following three months.

The program will also provide career counseling as well as online and offline training.

Sanctions for employers

Employers who fail to register their employees to the program must pay cash compensation to the employee as a lump sum in addition to providing job training.

Who is eligible for the unemployment scheme?

Employees must meet the following conditions to be eligible for unemployment benefits:

  • Must be an Indonesian citizen;
  • Have not yet reached 54 years of age when registering for the benefits;
  • Must be formally employed; and
  • Must be registered in both BPJS Kesehatanand BPJS Ketenagakerjaan programs at least six months before the termination of employment.

Healthcare program

Indonesia's healthcare program is said to be the world’s largest single-payer national health insurance program, covering 83 percent of the country’s 270 million population.  Those registered with the program, both Indonesians and expatriates, are eligible for free health services ranging from dental care to medicines to physiotherapy. Patients are also eligible for free emergency and chronic care, in addition to organ transplants.

What are the premiums for employees?

Five percent of an employee’s monthly salary will go towards paying for the healthcare premium, with a salary cap of 12 million rupiah (US$821).

Workers in the private sector will pay one percent, and the remaining four percent will be paid by their employer. For civil servants, the government contributes three percent, and for the employee, two percent. Further, the premium covers the employee’s spouse and three dependent children up to the age of 21.

How to calculate the healthcare premiums for employees?

The premium for employees is calculated as five percent of the monthly salary, with a salary cap of 12 million rupiah (US$766).


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In the private sector, the employer must pay four percent and the employee the remaining one percent. For civil servants, the government contributes to three percent while the employee contributes two percent.

In addition to the employee, the premium also covers their spouse and up to three dependent children up to the age of 21.

Employees earning less than 4 million rupiah (US$255) per month are eligible to receive Class I room facilities at the hospitals. Employees earning lower than this can receive Class II and III room facilities.

Classification of healthcare class facilities

The BPJS healthcare system is divided into three classes. This does not determine the level of treatment a patient receives, but it does determine the type of hospital room they will be given. Hospital rooms in Indonesia come with varying levels of comfort and size.

  • Class I patients are provided rooms with two to four other patients;
  • Class II patients have to share with three to five others; and
  • Class III patients will have to share with five to six.


How to calculate the healthcare premiums for non-employees?

The premiums for individuals who are classified as non-employees/self-employed /non-formal workers are as follows:

  • Class I – 150,000 rupiah (US$9.58) per person, per month;
  • Class II – 100,000 rupiah (US$6.38) per person, per month; and
  • Class III – 42,000 rupiah (US$2.68) per person, per month (for this specific class, the government will pay 16,600 rupiah (US$1.06) of the total amount, per person, per month).

Religious holiday allowances

The payment of the religious holiday allowance (Tunjangan Hari Raya – THR) by employers to their employees is mandatory in Indonesia.

The THR is a yearly bonus given to employees at least one week before the start of the religious holiday observed by the employee (based on the employee’s religion), equivalent to one month’s salary (based on the period of employment). The recognized religious holidays for THR payment are:

  • Eid-il-Fitri for Muslims;
  • Christmas for Catholics and Protestants (considered as two different religions in Indonesia);
  • Nyepi for Hindus;
  • Vesak for Buddhists; and
  • Chinese New Year for Confucianism.

The practice of many businesses in the country has been to pay the THR of non-Muslim employees prior to the Christmas holidays, and those of Muslim employees before the Eidil-Fitri break.

Who is eligible to receive THR and how is it calculated?

All employees, whether permanent or contract-based are eligible for THR and it must be paid using Indonesian rupiah.

The amount paid is based on the employees’ service period. For employees working for more than 12 continuous months, they are entitled to THR equivalent to one month’s salary.

For employees who have served one month or more but less than 12 months, the THR is calculated on a pro-rata basis using the following formula:

(Service period/12) x 1 month’s salary

Freelance workers are also entitled to THR. Those working for more than 12 continuous months must receive the equivalent of one month’s salary, which is calculated on the average salary they received throughout this period.

For those working more than one month and less than 12 months, the THR is calculated based on the average monthly salary throughout the employment period.

Fines for non-compliance

The businesses that fail to pay the THR will be fined five percent of the THR amount, which will be used for the employees’ welfare. Further, this sanction does not waive the employer’s obligation to pay the THR.

In addition to financial sanctions, employers will be subject to administrative sanctions for failure to pay the THR. These are:

  • Restriction of business activities;
  • Permanent or temporary suspension of production facilities; or
  • Suspension of business activities.


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