ASEAN Labor Costs: Minimum Wage and Social Insurance Essentials

When assessing hiring costs in ASEAN, investors should note rising social protection expenditure in areas such as pensions and healthcare.

Across ASEAN, minimum wage rates are gradually rising to keep pace with the region’s growing cost of living and to stimulate domestic demand. However, despite these increases, minimum wages in most ASEAN countries remain significantly lower than those in developed economies. Beyond wage considerations, foreign investors must also navigate the expanding social protection expenditures imposed by ASEAN governments, which include mandatory contributions to pensions, health coverage, and welfare assistance. These factors significantly influence labor costs, which vary widely across the diverse economic landscapes of ASEAN member states.

Indonesia

Minimum wage

For 2024, Indonesia’s minimum wage rates have continued to increase across the provinces. The Ministry of Manpower issued guidance that minimum wage adjustments should reflect the country’s economic growth and inflation rates.

As of 2024, the average monthly minimum wage across Indonesia’s 34 provinces ranges from 2.036 million (US$126) to IDR 5.067 million (US$311).

Social insurance

Indonesia’s social security programs are run by two organizations — the Social Security Administrator for Health (BPJS Kesehatan) and the Workers Social Security (BPJS Ketenagakerjaan) — for pensions. The government has made it mandatory for all Indonesian citizens and expatriates to participate in social security programs. Expat employees must also enroll their families in the programs.

Healthcare

The employee premium is five percent of the monthly salary, with a salary cap of 12 million rupiah (US$839).

In the private sector, the employer must pay four percent and the employee the remaining one percent. For civil servants, the government contributes 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 21.

Pension

The pension program under BPJS Ketenagakerjaan covers the following:

• Accident compensation (JKK) – 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 (JKM) – upon the death of the participant, their heirs can claim the benefits.

The maximum salary used as the basis for the calculation is capped at six months’ salary of 5 million rupiah (US$352).

Malaysia

Minimum wage

 The monthly minimum wage in Malaysia’s 56 major cities is 1,500 ringgit (US$337).

The new minimum wage works out as follows for workers in city council or municipal council areas:

• 57.69 ringgit (US$12.96) per day for employees working six days per week;
• 69.23 ringgit (US$15.56) per day for employees working five days per week; and
• 86.54 ringgit (US$19.45) per day for employees working four days per week.

Social insurance

Employers and employees are required to make monthly contributions to the Social Security Fund managed by the Malaysian Social Security Organization (SOCSO). The contributions remain capped at a monthly wage of 5,000 ringgit (US$1,123).

Employment injury and invalidity scheme

This scheme provides protection against accidents or occupational disease arising from one’s employment and is obligatory for employees under the age of 60. The employee contributes 0.5 percent from their monthly wage while the employer contributes the remaining 1.75 percent.

Employment injury scheme

Employees who have reached the age of 60 will have to contribute 1.25 percent of their monthly wage to this scheme, payable by the employer. The scheme protects someone who has died due to their employment or suffered from invalidity due to their employment.

Philippines

Minimum wage

The Philippines has daily minimum wage rates that vary from province to province, ranging from PHP361 (US$6.32) to P610 (US$10.70) a day for 2024. The wages are set by tripartite regional wage boards located in every region.

Social insurance

In the Philippines, the employer and employee must make social security contributions to the Philippine Health Insurance Corporation (PhilHealth) and the Social Security System (SSS). This monthly amount corresponds to the salaries of the covered employees.

The total contribution rate is at 14 percent, with employers contributing 9.5 percent and employees contributing 4.5 percent.

The minimum monthly salary credit (MSC) has increased to PHP4,000 (US$70.20), and the maximum monthly salary credit (MSC) has increased to PHP30,000 (US$526).

In addition to the social security contributions, the employer and employee also must contribute to the Philippine Health Insurance Corporation (PHIC) and the Home Development Fund (HDMF).

The premium rate for PHIC was increased from 4 percent to 5 percent as of January 2024 and the maximum monthly basic salary ceiling was increased from PHP80,000 (US$1,403) to PHP100,000 (US$1,754)

Singapore

Singapore does not have a minimum wage, but it does have a comprehensive social insurance system. The Central Provident Fund (CPF) is a social security savings scheme, in which contributions are mandatory for citizens and permanent residents only. Foreign workers are not eligible for the CPF scheme.

Employers and employees contribute 17 percent and 20 percent, respectively, of ordinary monthly wages, up to an income ceiling of S$6,800 (US$5,141). The rates apply to employees aged 55 years and below.

Thailand

Minimum wage

The minimum wage was increased from 328 baht (US$9.33) to 353 baht (US$10.05) per day in Bangkok and surrounding regions, and from 330 baht (US$9.39) to 354 baht (US$10.08) per day in other provinces.

A further increase was implemented for employees in tourism-related businesses and four-star hotels, raising the minimum wage to 400 baht (US$11.39) per day in specific areas such as Bangkok’s Pathumwan and Watthana districts, Pattaya City in Chon Buri, Chiang Mai’s Nakhon Chiang Mai municipality, Prachuap Khiri Khan municipality, Phangnga’s Khuk Khak subdistrict municipality, Phuket province, Rayong’s Ban Phe subdistrict, Songkhla’s Hat Yai municipality, and Surat Thani’s Koh Samui district

Social insurance

The employee must pay five percent of the first 15,000 baht (US$427) earned per month towards the social security contribution. The employer also contributes five percent.

The contribution to the social security fund is divided into:

• Disability, maternity, and death benefits;
• Child and old-age benefits; and
• Unemployment benefits.

Vietnam

Minimum wage

Vietnam sets a different minimum wage level across its four regions.

• Region I: VND 4,960,000 (US$197) per month;
• Region II: VND 4,410,000 (US$175) per month;
• Region III: VND 3,860,000 (US$153) per month; and
• Region IV: VND 3,450,000 (US$137) per month.

Social insurance

Three types of mandatory social security in Vietnam must be covered by foreign enterprises seeking to hire local staff:

• Social insurance – The contribution rate is 17.5 percent for employers and 8 percent for employees. This covers sickness, maternity, occupational diseases, accidents, retirement, and death benefits; 
• Health insurance – The contribution rate is 3 percent for employers and 1.5 percent for employees. This covers medical benefits; and
• Unemployment insurance – The contribution rate is 1% for both employers and employees.

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