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OVERVIEW

1. A B O UT T HE S UR V E Y
Mercer is pleased to present the 2018 Indonesia Asia Pacific Compensation and Benefits Forum
(APCBF) Total Remuneration Survey (TRS). As shown in the following table, in this year 41
organizations submitted data for the survey.

2018 Indonesia APCBF Total Remuneration Survey Profile

Number of Participating Organizations Submitting Data to the Survey 41
Number of Incumbents Represented in the Survey Results 44,300
st
Data Effective Date 1 May 2018

2. I F YO U HA V E Q UE S TI O N S
If you have questions regarding the survey or the report, call us or e-mail us at:

+62 21 5797 8213 Ardhana Pradipta [email protected]

+62 21 2975 8022 Agnes Patricia [email protected]

3. A B O UT T HE RE P O R T
The results are presented in the following documents:

Overview provides information on the survey, participants, and general policy and practice
information including:
§ Political Developments
§ Economic Developments
§ Labor Developments and Trends
§ Tax and Social Security Developments and Trends
§ Year over Year Trends Executive Summary

The document is in a PDF format.

Survey Methodology and Definitions presents a description of the methodology used to analyze
the data collected, as well as definitions of all variables and statistics included in the survey report.
Additionally, describes the job matching methodology in Mercer Job Library and the valuation
methodology for determining values for benefits and long-term incentives. This document is in PDF
format.

Participant List provides the names of all survey participants as well as classification by sector and
super sector. The classification is useful for an analysis using refinements, in Mercer WIN® and is in
an Excel format.

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Policy and Practice Reports gives an overview of the prevalence of practices and policies for short
and long-term incentives, and benefits plans. This report is in PDF format.
Library Jobs Detailed Report presents the statistical analysis of each compensation element
actual market data, for each surveyed position (Job), Mercer Combined Job, and Core Job.
The report is in an Excel format.

Library Jobs Summary Report provides actual market data statistics for each surveyed position
(Job), Mercer Combined Job, and Core Job within job family. Data statistics include main
compensation aggregates). The report is in an Excel format.

Year over Year Trends offers trends for Base Salary, Total Guaranteed Compensation, and Total
Cash Compensation (Actual) by benchmark positions in an Excel format. The year-over-year
compensation movement analysis for jobs that have been mapped directly between the previous job
catalog underpinned with MUPC® and the new Mercer Job Library is available.

Position Class (Actual and Regressed Data) provides the actual an regression market data by
Position Class (PC). in an Excel format. With this download survey results are easier to use in
further analysis.

Excel Download of Actual and Regressed Data reflect new Mercer Job Library outputs
(Job, Core Job, Mercer Combined Job). The report is in an Excel format.

Mercer Job Library includes all jobs in the Mercer Job Library. The file is in an Excel format.

4. S U RV E Y R E S UL TS

4.1. Mercer WIN®

Mercer WIN® allows access to the participating organization’s Mercer data using a variety of
parameters - geography, industry, organization size and more - to efficiently organize and analyze
the organization’s TRS data. Mercer WIN® makes it easy to combine jobs and Position Classes (PC)
to better represent an organization, as well as compare the organization’s data against selected
markets. Mercer WIN® not only makes information easily accessible, but also readily convertible into
specific charts, graphs and reports. It provides flexibility in arranging, plotting and exporting data by
industry, country or other criteria.

For further details, visit www.imercer.com/win.

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5. P A R TI CI P A N T P RO FI L E

Industry – Survey participants are categorized by super sector and sector types, as shown below.
Industry – Super Sector Percentage of Organizations
Banking/Financial Services -
Chemicals -
Consumer Goods 85%
Energy -
High Tech -
Insurance/Reinsurance -
Life Sciences -
Logistics -
Mining & Metals -
Other Manufacturing -
Other Non-Manufacturing -
Retail & Wholesale 15%
Services (Non-Financial) -
Transportation Equipment -
Based on responses from 41 organizations
Note: The total does not equal 100% due to rounding.

Industry – Super Sector Industry – Sector Percentage of Organizations

Beverage & Tobacco 29%
Food 23%
Over the Counter Pharmaceutical -
Consumer Goods
Personal Care & Household Products 23%
Combination Consumer Goods 9%
Other Consumer Goods 17%
Based on responses from 35 organizations

Industry – Super Sector Industry – Sector Percentage of Organizations

Apparel, Fashion, Footwear & Accessories
Retail 33%
Convenience Retail -
Department Stores -
Electronics, Entertainment,
Communications & Office Retail -
Retail & Wholesale Grocery, Pharmacy & General Merchandise
Retail -
Home, Hardware, Building & Garden
Supply Retail -
Restaurants -
Specialty Retail 67%
Wholesale Distribution -
Based on responses from 6 organizations

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Organization Type – As shown in the table below, 95% of survey participants are subsidiaries.
Organization Type Percentage of Organizations
Parent Company / Independent Company / Corporate -
Subsidiary 95%
Multi-Profit Center (Group) -
Division 5%
Based on responses from 41 organizations

Ownership Type – As shown in the table below, 44% of survey participants are publicly traded.
Ownership Percentage of Organizations
Publicly listed on a stock exchange 44%
Private (not listed on any stock exchange) 41%
State-Owned Enterprise (Crown Corporation) -
Joint-Venture 15%
Not-for-profit -
Based on responses from 41 organizations

Parent Organization’s Head Quarter Location – As shown in the table below, 37% of parent
organizations head quarter locations are based in the United States.
Parent Organization Nationality Percentage of Organizations
France 27%
Netherlands 7%
Switzerland 7%
United Kingdom 10%
United States 37%
Others 12%
Based on responses from 41 organizations

Stock Exchange Location

Stock Exchange Location Percentage of Organizations
Japan 6%
Netherlands 11%
United Kingdom 17%
United States 67%
Others -
Based on responses from 18 organizations

Organization Size – The following tables provide information about the size of organizations
participating in the survey based on their reported annual net sales revenue, operating
expenses/budget (in USD) and total employment (FTEs).
th th
Local Office 25 Percentile Average Median 75 Percentile No.
of
Resp
.
Net Sales Revenue 16,726,980 412,522,405 105,012,283 292,847,778 34
Operating Expenses/Budget 1,085,074 163,846,659 44,267,008 117,833,046 14
Full-time Equivalents (FTEs) - 32 1,350 248 1,360 40
most recent completed fiscal
year

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Net Sales Revenue 25th Average Median 75th No. of Resp.

Percentile Percentile
Less Than $25 Million 5,002,000 9,497,747 9,100,000 15,363,460 9
$25 Million < $50 Million - - - - 1
$50 Million < $100 Million 74,864,750 81,148,226 81,743,234 88,082,268 6
$100 Million < $250 Million 111,268,425 142,458,004 135,319,733 184,250,000 8
$250 Million < $500 Million - 331,812,713 329,565,185 - 4
$500 Million < $1 Billion - - - - 2
$1 Billion < $3 Billion - - - - 2
$3 Billion or More - - - - 2

Operating Expenses/Budget 25th Percentile Average Median 75th No. of

Percentile Resp.
Less Than $25 Million - 2,054,496 764,147 5,099,010 6
$25 Million < $50 Million - - - - 1
$50 Million < $100 Million - - - - 2
$100 Million < $250 Million - 115,102,465 - - 3
$250 Million < $500 Million - - - - -
$500 Million < $1 Billion - - - - 2
$1 Billion < $3 Billion - - - - -
$3 Billion or More - - - - -

Full-time Equivalents (FTEs) - 25th Percentile Average Median 75th No. of Resp.
most recent completed fiscal year Percentile
Less Than 50 5 17 15 31 12
50 < 100 - - - - 2
100 < 250 124 149 145 177 6
250 < 500 329 408 418 479 8
500 < 1,000 - - - - 1
1,000 < 3,000 1,360 1,626 1,544 1,933 6
3,000 < 5,000 - - - - 1
5,000 < 10,000 - - - - 2
10,000 or More - - - - 1

Type of Activities Percentage of Organizations

Products 100%
Services -
Based on responses from 39 organizations

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Products Percentage of Organizations

Basic Research and Development -
Applied Research and Development 41%
Engineering 46%
Procurement/Inbound Logistic 62%
Production 64%
Application/Assembly 21%
Marketing 85%
Sales 90%
Distribution 64%
Service 38%
Based on responses from 39 organizations
Note: Some organizations indicated more than one type of activity; therefore the total exceeds 100%.

Parent Organization 25th Average Median 75th Percentile No. of

Information Percentile Resp.
Parent Organization 2,502 49,248 31,100 73,065 25
Worldwide FTE
Parent Organization 5,057,241,392 738,944,603,209 17,796,068,181 64,754,134,626 21
Worldwide Revenue (USD)

6. P O L I TI C A L DE V E L O P M E N TS A N D E CO NO MI C
D E V E L O P M E N TS

6.1. Politics

The candidate registration for April 2019 President race is already approaching its deadline with less
than 3 months away. It is still uncertain who will oppose President Joko Widodo (Jokowi) as he runs
for his second and last term. Prabowo Subianto (who leads the opposition to Jokowi) and Susilo
Bambang Yudhoyono (SBY), who was President of Indonesia 2004 – 2014, are working on
alternative ticket that would place SBY’s son, Agus Harimurti Yudhoyono (AHY) as vice-president.

In conjunction with governor and municipal election last time, the number of bomb terrorist attacks
at churches and police stations has led to the government beefing up the anti-terrorist capacity.
After a string of terrorist attacks, Indonesia’s parliament has passed a tough anti-terrorist law that
strengthens the role of the army (TNI) in curbing civil unrest. This is controversial, given Indonesia’s
decades under a military dictatorship. Yet a survey by Kompas, a respected newspaper, shows 90%
of respondents supporting an enhanced role for the TNI. That will help the government counter the
threat of over 500 Indonesians who joined ISIS in Syria and have since returned to Indonesia.

Source: IMA Asia: Asia Pasific – Executive Brief June 2018

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6.2. Economy

Indonesia’s outlook is shaped by three trends. An infrastructure boom is underway, with strong
sales of cement and steel imports thanks to the government’s infrastructure program. Along with
higher oil price that is contributing to second trend, which is at 24% year-to-date, export growth was
just at 9% year-to-date. The lowering of the GDP growth calculation is leading to a rising current
account deficit, which has hurt the Rupiah. The third trend is the continued weak consumer deman,
which is particularly apparent for big-ticket purchases like cars and motorcycles.
Overall GDP growth in first quarter of 2018 is stuck at 5.1% y-o-y, matching the full 2017 rate and
the 5% reported for 2016.

Real growth in consumer demand on the GDP measure was 4.9% y-o-y in first quarter 2018, in line
with growth for the prior four years. From 2013 – 2016, retail sales in current terms averaged 12%
p.a. But in 2017, growth slumped to 2.7%, and in first quarter 2018 growth was just 0.7% y-o-y.
Vehicles sales have also stalled, with light vehicle sales falling 2.1% in 2017 before a weak lift of 1%
year to date by April. Motorcycle sales fell 18% in 2015, another 9% in 2016, and 0.8% in 2017
before climbing 14% ytd by April. This turned a market that had reached 8 million units in 2011 into
a 6 million unit market over 2016 and 2017. The expectation of real growth in consumer demand is
5.1% this year and 5.6% next year, with most of the impetus remaining in basic goods.

Construction is leading GDP growth with a 6.8% rise in 2017, followed by 7.4% y-o-y real growth in
first quarter 2018. The lift in construction work is apparent in cement sales, which continued growing
at 9.6% year to date for the first four months of 2018, matching the pace of full 2017, and well above
the average 5%pa growth in the decade to 2016. That also saw steel imports for the year to March
2018 surge by 31% y-o-y, following a 20% increase in 2017 and falls to 8% in 2016 and 20% in
2015. We expect construction growth on the GDP measure of 7.2% this year and 6.5% in 2019 from
6.8% last year.

2017 (Actual) 2018 (Estimated) 2019 (Forecast)

GDP Growth 5.0%* 5.4% 5.5%
Inflation Rate 3.6%* 3.5% 4.0%
Source: IMA Asia: Asia Pasific – (Executive Brief June 2018*) Laporan Bulanan Data Sosial Ekonomi,
Indonesia Statistic Agency (BPS) – July 2018 edition

6.3. Labor Market/Law

There are currently 6.7 million people in Indonesia as of February 2018 that are unemployed,
according to the Indonesia Statistics Agency (BPS). In the past year, unemployment has been
reduced by 140 thousand people. This number accounted 5.13% of the total number of workforce of
133.9 million people.

2017 (Actual) 2018 (Estimated) 2019 (Forecast)

Unemployment 5.5%* 5.3%** 5.0%**
Source: Indonesia Statistic Agency (BPS) – February 2018 edition*
IMA Asia: Asia Forecast Book Q2 2018 to 2022

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6.4. Tax and Social Security

Indonesia’s tax bracket has been effective since 1 January 2009. The percentage is based on
Indonesian Tax Law No. 36 of 2008, Article 17. The individual taxable incomes of local employees
are applicable in tiers outlined below.

Income bracket percentage:

· 5% for those with annual taxable income up to IDR 50 million
· 15% for those with annual taxable income range from IDR 50 million to 250 million
· 25% for those with annual taxable income range from above IDR 250 million to 500 million.
· 30% for those with annual taxable income more than 500 million.

Details of annual taxable income are explained in Indonesian Tax Law No.36 of 2008 Article 6 and
Article 7. In 2016, the annual non-taxable income for Individual tax payer was revised. It was raised
from IDR 36,000,000 to IDR 54,000,000 (annual). Employees with salary less than IDR
54,000,000/year are excluded from income tax. The market data presented in this report is based
on gross salary (inclusive of tax).
Source: Indonesian Tax Law No. 36 of 2008
General Directorate of Tax Regulation No. 16 of 2016

Social Security

Indonesia has set up an organization called Badan Penyelenggara Jaminan Sosial (BPJS), which
oversees the operation of the social security system (Sistem Jaminan Sosial Nasional – SJSN).
BPJS started its operations on January 1st 2014. The organization itself is divided into two separate
entities, which covers different benefits. BPJS Employment, replacing JAMSOSTEK, covers old age
savings; accidental, death & dismemberment (AD&D); and life insurance, with the objective of
providing basic workforce protection for Indonesian workers. Furthermore, the new national pension
scheme (BPJS Pension) is under BPJS Employment. On the other hand, BPJS Health oversees the
new universal healthcare program under SJSN called Jaminan Kesehatan Nasional (JKN), which
covers medical benefits with the objective of ensuring that all Indonesian citizens and qualified
foreigners receive basic health care.

Under this social security system, all Indonesian citizens and foreign expatriates who live in
Indonesia for more than 6 months are required to register. Although there are two different social
security benefits covered by SJSN, the first phase is to implement JKN, whose goal is to have all
Indonesian citizens registered by January 1st 2019. According to the Presidential Decree (Perpres)
No. 111/2013, large, medium, and small sized companies have to register their employees by
January 1st, 2015. According to the latest government regulation number 19 in 2016, both
employers and employees are expected to contribute 4% and 1% of base wages, the amount is
capped at IDR 8,000,000 covering 1 spouse and maximum of 3 children. The benefits for the
employees are differentiated based on their base salary:
1. Employees with a base salary less or equal to IDR 4,000,000 per month will get a second
class medical treatment in the respective hospital.
2. Employees with a base salary more than IDR 4,000,000 per month will get a first class
medical treatment in the respective hospital.

As for the second phase, SJSN aims to roll out the second program, BPJS Employment. BPJS
Employment (Old Age Savings, Old Age Benefits, AD&D, and Life Insurance) is compulsory for
companies with over 10 employees or a monthly payroll of at least IDR 1,000,000. For BPJS
Employment, expatriates are not obligated to be enrolled if the employee is from a country in which

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he/she is enrolled in a program similar to BPJS Employment. However, there is yet to be a formal
regulation issued legalizing the minimum contribution for both employers and employees.

Effective 1 July 2015, the government has announced the details of its national pension scheme,
BPJS Pension. BPJS Pension is mandatory for all Indonesian citizens and expatriates working for
more than 6 months in Indonesia. Employers will be contributing 2% and employees will be
contributing 1% of the monthly base salary (including fixed allowances) with pensionable earnings
capped at IDR 7 million per month. The program provides a monthly pension upon retirement age of
1% of the average salary while taking into consideration the total number of years of service or
contribution period to BPJS Pension.

In the initial stage, participation will be restricted to large-scale and medium-scale businesses only,
which is defined as follows:
· Large-scale businesses: annual revenue greater than IDR 50 billion or total assets greater
than IDR 10 billion
· Medium-scale businesses: annual revenue between IDR 2.5 billion and IDR 50 billion or total
assets between IDR 500 million and IDR 10 billion

Source: Presidential Decree (Perpres) no. 111/2013

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7. Y E A R O V E R Y E A R T RE ND S – E X E CU TI V E S UM M A R Y

7.1. Introduction
This section presents an overview of market annual salary change from the previous survey results,
including a discussion about Challenges in Measuring Market Pay Trends, followed by Overall
Market Pay Trends for this survey. Detailed Year over Year (YoY) change results from both an
overall market perspective and for individual benchmark positions are in a separate Excel file.
For an explanation of Mercer’s YoY Market Trend methodology, see the Methodology and
Definitions section.

7.2. Challenges in Measuring Market Pay Trends

The primary challenge in measuring pay trends is isolating “real” market pay trends when many
other factors work to distort them. For example:

§ Survey Sample Composition Changes – Organizations in a survey database tend to change

from year to year, which is the case for many Mercer surveys. New participants are likely to
have different pay policies than the organizations participating the previous year. Similarly, the
composition of the sample can change if some organizations do not participate each year.
Finally, an organization itself can change substantially from one survey year to another due to
reorganization, acquisition or divestiture.

§ Job Matching Changes – Organizations may participate in both survey years but match jobs
differently in each year, which will impact benchmark positions’ market pay levels and distort the
ability to isolate real trends. This situation can occur if the organization has
restructured/reconfigured or outsourced/off-shored jobs.

§ Incumbents Shift In and Out of Benchmark Positions – Through promotions and other
career moves, incumbents may move between benchmark positions within an organization that
participates in both survey years. For example, a relatively highly paid employee in an
experienced level benchmark position may be promoted to a senior level of another benchmark
position. This change could lower the pay trends in both the experienced level position (due to
removing a highly paid incumbent) and the senior level position (due to adding a lower salary
incumbent relative to the other senior level incumbents).

§ Salary Budget vs. Survey Market Changes – The survey market results do not always align
with organizations’ salary budget changes and forecasts for the reasons cited above. Salary
budget change data also tends to use a subset and/or different sample than the survey market
results. Additionally, the salary budget represents what an organization is expected to spend on
organization pay (that is, policy) while the survey results reflect how organizations actually pay
overall and for individual jobs, including spending on promotions, additional retention increases,
and so on.

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Mercer Job Library is a new job classification and coding system used in this survey. This unique,
global job catalog provides consistent data collection, enhanced job content, intuitive results
analysis and, ultimately, more relevant data. Part of this effort includes an introduction of a newly
updated, globally consistent and applied set of Mercer International Position Evaluation (IPE)
standard evaluations.

The new IPE standard evaluations take into account implications of the constantly evolving nature of
jobs. The standard evaluations have factor scores aligned with the nature of work and career stream
and level structure used in Mercer Job Library. Standard evaluations have been created for every
job in Library resulting in standard reference evaluations being used as starting points for
organization specific evaluations.
The above mentioned improvements are aimed at increasing confidence in the availability and
quality of survey results.

In order to increase understanding of real market trends, we are providing additional summaries of
year-over-year trends calculated using methods to reduce the impact of the methodology change.

7.3. Overall Market Pay Trends – Indonesia

This section provides an overview of how market annual base salary has changed from the previous
survey.

Table 1 presents an overview of market change by broad employee groups, contrasting salary
increase budget with overall market annual base salary change measured by changes in
benchmark positions for same incumbents. Inflation statistics are also provided for context.

Together, Tables 1 and 2 help organizations understand the extent to which the survey results
represent market change in the following discussion.

Table 1 – Overall Year over Year Percentage Change by Career Stream

Source Executives Management Professionals Para-
Professionals

2018 Inflation Forecast 3.5%

2018 Salary Increase Budget* 8.3% 8.3% 8.5% 8.5%
Benchmark Positions –
Same Incumbents 5.0% 7.5% 8.7% 11.4%
* Represents the percentage that participant organizations budgeted for salary increases during the year.

Table 2 – Survey Participation Changes

2018 2017 Percentage Change
Number of Organizations 41 40 2.5%
Number of Incumbents 44,300 48,227 -8.1%
Note: 38 (93%) of participants are the same as the previous year.

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Chart 1 – Overall Year over Year Percentage Change by Career Stream

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Chart 2 – Overall Year over Year Salary Increases by Job Family

Note: The year-over-year comparison is presented only for Job Families where sufficient data was collected.

Salary increase rates may be also affected by relative demand and supply of different types of skills
in the market. Higher demand for some jobs may lead to larger salary increases to attract and retain
talent. Chart 1 presents comparison of salary increases in different Job Families.

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7.4. Commentary on Country Year over Year Change

Detailed analysis of year over year compensation trends shows the largest annual increases for
Production & Skilled Trades and Supply Chain job families. Lower increases were awarded to
Project/Program Management and IT, Telecom & Internet jobs.

7.5. Detailed Market Year over Year Results

Separate Excel files present year over year trends for Base Salary, Total Guaranteed
Compensation, and Total Cash Compensation (Actual) by individual Benchmark Positions. See the
Methodology and Definitions section for information on the Year over Year Market Pay Trends.

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