Hiring international employees can be an attractive option for growing companies. Countries like Papua New Guinea offer more cost-effective skilled talent than the US and Canada along with other benefits.  

While salaries are important, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory social security contributions. They may also provide staff with additional benefits like healthcare when competing for top talent. 

This article will walk you through the costs of hiring in Papua New Guinea in accordance with local laws. 

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Costs to Consider When Hiring Around the World

The basic hiring costs in Papua New Guinea include: 

  • Employee’s gross salary 
  • Taxes and benefits
  • Vacation pay and other leaves 
  • Overtime pay 
  • Severance pay 

Plus, you may want to add certain optional costs like benefits, bonuses, and extras. 

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Mandatory Costs of Hiring an Employee in Papua New Guinea 

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Salary  

With a vibrant young population, Papua New Guinea is an excellent location to hire fresh talent. The country is undergoing a rapid digital transformation, creating a forward-looking workforce and labor environment. 

The minimum wage in Papua New Guinea is 3.5 PGK per hour (about USD 1).  

However, salaries for skilled workers and sophisticated IT talent will vary greatly. You can get an idea of average salaries by doing some market research or partnering with a local staffing agency. 

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Mandatory Taxes and Benefits 

Payroll costs in Papua New Guinea add up to about 8.4% of the employee's gross salary. This employer contribution goes toward an employee’s superannuation fund, which is essentially a pension fund.  

Employers and employees both contribute to taxes and funds. So, employers must also withhold: 

  • 30-42%: Individual Income Tax 
  • 6%: Superannuation Fund  

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Mandatory Bonuses  

There are no mandatory bonuses in Papua New Guinea. However, it’s customary to reward high performance with bonuses. 

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Paid Leave

There are several types of paid leave entitlements in Papua New Guinea. 

  • Public holidays: There are 11 public holidays in Papua New Guinea. 
  • Paid time off: Full-time employees are entitled to 14 days of annual paid vacation. 
  • Sick leave: Papua New Guinea employees can take 18 days of paid sick leave per year with a medical certificate. 
  • Parental leave: Only new mothers are entitled to maternity leave. They can take the leave medically necessary prior to the child’s birth and six weeks thereafter.   

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Overtime Pay 

Papua New Guinea employees typically perform 40 working hours per week. Overtime hours worked on Monday to Saturday are paid at 1.5 times the hourly rate. This goes up to double the rate on public holidays and Sundays. 

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Severance Pay 

If a contract is terminated without just cause, the court will determine the amount of severance pay owed to the employee. 

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Additional Costs of Hiring Papua New Papua New Guinea Talent 

Today’s talent market is extremely competitive. To hire top talent, employers may also want to offer a benefits package, which can help both search and retention. Here are some benefits you might consider offering Papua New Guinea employees along with other possible costs. 

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Benefits 

Offering the right benefits package can help you stand out from the competition. In Papua New Guinea, many employers offer private health insurance for employees and their families. Prices for this vary greatly, depending on the type and extent of coverage. 

It is also common for employers to provide stipends for housing, food, transportation, and other basic living expenses. 

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Bonuses and Extras 

Finally, you’ll want to think about smaller expenses like gifts for special occasions, comped meals, or coffee for meetings. 

If you hire one or two employees in Papua New Guinea, they’ll likely do remote work. Even so, you may want to pay for a coworking space or provide funding to set up a home office. 

However, you might be hiring an entire team to work on larger projects such as software development. If that’s the case, you can rent an office space to facilitate collaboration among your staff in Papua New Guinea. 

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Average Cost of Hiring One Employee in Papua New Guinea (Annual in USD)

Below is an estimate based on a salary of $100,000 for an employee in Papua New Guinea. This salary is for ease of calculation only. It will change depending on your hiring goals including the employment contract, the candidate’s experience, and the type of position. 

  • Salary: $100,000
  • Employer Taxes: $8,400
  • Superannuation Fund: 8.4%:
  • Total: $108,400 + Benefits (discretionary) 

Note that these totals do not include other standard costs like soft benefits commonly offered in Papua New Guinea.

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A Global EOR Can Help You Manage International Payroll 

With so many costs to consider, it may feel overwhelming to start hiring globally. An Employer of Record (EOR) can help. An EOR like Borderless can help you hire and pay employees in Papua New Guinea in accordance with local employment laws.

If you’d like to begin global hiring but aren’t sure where to start, book a demo with Borderless. We’ll walk you through every step, so that you can reap all the benefits without the added headaches. 

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Disclaimer

Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.