The Dark Side of HR Challenges in Indonesian Recruitment

Smiling HR managers and satisfied employees is a perfect scenario of hiring talents that is not common in Indonesia. Let’s look behind the scene and analyze the dark side of Indonesian recruitment and how to tackle it.

In light of the rapid growth of the Indonesian business landscape, companies and their human resource (HR) professionals in Indonesia are now presented with endless recruitment challenges. Beyond just hiring employees, the HR role is invariably evolving in order to keep up with the pace of expanding business requirements.

According to the regulations enacted by the Ministry of Manpower in Indonesia, specific qualifications and competencies of individuals – foreign workers and executives, expats, and locals – are needed in order to work in Indonesia.

Especially for foreigners, the process of working and living Indonesia is complicated with issues pertaining to work permits, bureaucracy, Indonesian labor regulations that can change from time to time. This article will let you know the dark side of recruitment in Indonesia and why you should consider hiring employees through an Employer of Record service.

Having a temporary stay permit (KITAS), also known as a working visa or working KITAS, is one of the necessities when working in Indonesia. Check Work Permit and KITAS in Indonesia to learn more.

The Dark Side of Indonesian Recruitment and the Main Challenges

High Unemployment Rate

Here’s the fact: there is a lot of unemployment in Indonesia, mainly in the job market of unskilled laborers due to the overflowing applications.

In 2016, thirty million senior secondary graduates and 10 million tertiary education graduates in Indonesia have gotten out of school and are ready to enter the labor force.

Skill and Talent Gaps

Unlike many developing countries, the skill and talent gaps are real for recruitment in Indonesia.  There is a very strong indication that skilled Indonesian professionals, mid-level and senior-level executives are highly sought after, and there is still a substantial talent shortage in the marketplace.

You may be wondering; since there are so many tertiary graduates every year (with an increase of 1 million from 2010 to 2015), these gaps could be filled quite easily.

Not really. All because the quality and learning environment offered by universities in Indonesia is often inadequate – lack of learning facilities, unqualified educators, and insufficient teaching materials. And almost always, the best graduates are always reserved and taken by big companies even before they graduate from their universities.

High Cost

Skill and talent gap also affect businesses greatly in Indonesia – making recruitment even harder, and costly. Every year, the costs of hiring employees are going up at the distressing rate.

This is because companies now would offer higher entry salary and increments to attract and retain skilled professionals. As a result, costs of businesses are increasing tremendously, but the revenue can stay stagnant, caused by the unqualified and unproductive staff.

Fake Degrees

Unqualified staff is common in Indonesian companies and is no accident. According to research by Cornell University, 52 percent of employees in Indonesia are actually under-qualified for their jobs.

One of the biggest factors is that some of those incompetent employees got away with buying a falsified degree while joining the company.

Buying a fake degree in Indonesia is not new – as it can be done at a price of IDR 50 million (US$3,681). The problem is so serious that hiring employees for companies might be a nightmare.

Both foreigners and locals can even purchase CVs (resumes), cover letters, diplomas, and other kinds of specialised certificates online, just with a few clicks and easy payment.

Faking degrees is a severe crime in Indonesia and can lead to a hefty fine of IDR 500 million, or up to 5 years of incarceration. Even though the issue is still prevalent, experienced HR companies such as Cekindo know how not to be deceived by nice but fake documents.

Size of the Country

Indonesia is one of the biggest countries, and it does not make finding your ideal candidate any easier. The one you are looking for can reside in a different city or maybe even on a different island.

Family relationships are important in Indonesia, and you can never be sure that your candidate will agree with moving out of the hometown.

In this blooming market and economy in Indonesia, companies need to identify better ways to tackle the key obstacles of hiring employees – by transitioning in-house HR functions through HR outsourcing and PEO outsourcing.

If you want to save cost & time while still being able to guarantee the functions of your business, you need PEO outsourcing services. Check Understanding PEO Outsourcing Services in Indonesia to learn more.

Through this strategic partnership, the recruitment process can become more cost-effective and sustainable for the long run. Fill in the form below and we will help you to find your ideal candidates.