For Singapore-based companies, Johor Bahru has become an increasingly relevant location when considering where to build or expand a team. Its proximity to Singapore makes it possible for businesses to consider Johor Bahru not only as a separate Malaysian market, but also as part of a wider Singapore–Johor workforce strategy.
When comparing the cost of hiring across the two locations, salary is only one part of the overall employment cost. Employers in Singapore and Malaysia are subject to different statutory contributions, levies and social security requirements. These differences affect the actual cost of employing a worker and should be considered when comparing hiring in Singapore with hiring in Johor Bahru.
This article looks at the key employer-side employment costs in Singapore and Johor Bahru as of September 2026.
Specific salary levels are not included in this comparison. The focus is on statutory employer contributions and employment-related levies.
Singapore vs Johor Bahru Hiring Costs at a Glance
Johor Bahru follows Malaysia’s national employment contribution framework, so the statutory rates below are Malaysian rates rather than Johor-specific rates.
| Cost Item | Singapore | Johor Bahru, Malaysia |
|---|---|---|
| Retirement contribution | CPF: 17% of CPF-applicable wages for employees aged 55 and below | EPF: 13% for Malaysian employees earning RM5,000 and below; 12% above RM5,000 |
| Social security | No direct equivalent | SOCSO: generally 1.75% of insured monthly wages for the employer share |
| Employment insurance | No direct equivalent | EIS: 0.2% of insured monthly wages for the employer share |
| Training levy | SDL: 0.25% of monthly total wages, minimum S$2 and maximum S$11.25 per employee per month | HRD Levy: 1% of monthly wages for employers with 10 or more Malaysian employees; 0.5% if employers with 5–9 Malaysian employees register voluntarily |
| Foreign employee levy | S$0–S$900 per month, depending on work pass type, sector, skill level and quota tier | RM0–RM1,850 per year, depending on immigration category and sector |
The actual employer cost will vary depending on factors such as nationality, age, salary, company size, employee category and work authorisation.
The following sections look at each of these costs in more detail.
CPF in Singapore vs EPF in Johor Bahru
The largest statutory payroll contribution for employers in both markets is typically the mandatory retirement-related contribution. For this comparison, the focus is on the employer contribution, as this directly affects the cost of hiring.
Singapore – CPF
For employees aged 55 and below earning more than S$750 per month, the 2026 employer CPF contribution rate is:
- Employer: 17%
Employer contribution rates are lower for older employees. For example, the employer rate is 16% for employees above 55 to 60 and 12.5% for employees above 60 to 65 in 2026.
Johor Bahru – EPF
For Malaysian employees below 60, the 2026 employer EPF contribution rate is generally:
- Employer: 13% for monthly wages of RM5,000 and below
- Employer: 12% for monthly wages above RM5,000
SOCSO and EIS in Malaysia
Unlike Singapore, where CPF represents the largest single statutory contribution for local employees, Malaysian employers typically contribute through several separate schemes.
SOCSO
For most employees below 60 who fall under the First Category contribution structure, the employer’s SOCSO contribution is generally 1.75%. The contribution is subject to the applicable contribution schedule and insured wage ceiling.
SOCSO is therefore an additional statutory employer cost in Johor Bahru, separate from EPF.
Employment Insurance System – EIS
Eligible Malaysian citizens and permanent residents working in the private sector are generally covered under Malaysia’s Employment Insurance System.
The employer contribution is:
- Employer: 0.2%
The contribution is subject to the applicable wage ceiling. Foreign workers are generally not covered under EIS in the same way as eligible Malaysian citizens and permanent residents.
SDL in Singapore vs HRD Levy in Malaysia
Both countries also have employer-funded mechanisms supporting workforce development and training.
Singapore – Skills Development Levy
Singapore employers must pay the Skills Development Levy for employees working in Singapore, including foreign employees.
The levy is: 0.25% of monthly total wages
subject to:
- Minimum: S$2 per employee per month
- Maximum: S$11.25 per employee per month
The maximum applies once monthly total wages exceed S$4,500. Because of the monthly cap, SDL is relatively small compared with CPF for most professional employees.
Malaysia – HRD Levy
For employers covered by HRD Corp requirements, the levy is calculated as a percentage of monthly wages. Employers with 10 or more Malaysian employees are generally required to register with HRD Corp and pay a levy of: 1% of monthly wages
Employers with 5 to 9 Malaysian employees may register voluntarily, in which case the levy is generally: 0.5% of monthly wages. (The levy is used to support employee training and workforce development programmes.)
For Singapore companies establishing a larger team in Johor Bahru, this is therefore another cost that may become relevant as local headcount grows.
Hiring Foreign Employees – A Different Cost Structure
The difference between Singapore and Johor Bahru becomes more significant when foreign employees are involved.
Singapore
Foreign employees generally do not receive CPF contributions. However, employers hiring S Pass or Work Permit holders are subject to additional employer costs and hiring restrictions.
For S Pass holders, employers must pay a monthly levy of S$650. For Work Permit holders, the monthly levy varies by sector, skill level and levy tier, generally ranging from S$250 to S$900 under the current structure.
Employers are also subject to foreign worker quotas. The applicable quota depends on the company’s sector and workforce composition.
Johor Bahru
Malaysia introduced mandatory EPF contributions for most non-Malaysian citizen employees from October 2025.
For covered non-Malaysian employees, the standard employer contribution is generally:
- Employer EPF: 2%
Foreign workers are also covered under Malaysia’s social security framework. For applicable foreign workers, the employer contribution under PERKESO is generally:
- Employer PERKESO: 1.75%
Employers hiring foreign workers in Malaysia are also subject to foreign worker approval requirements, including quota approval through the relevant Malaysian authorities.
Other Employment Costs
Statutory contributions and levies are only part of the total employer cost. Singapore-based companies comparing hiring in Singapore and Johor Bahru should also consider salary, employee benefits and foreign hiring administration when evaluating the overall cost of employment.
Salary and Compensation
Salary is typically the largest component of employment cost. Compensation levels can vary significantly between Singapore and Johor Bahru depending on the role, industry, seniority and availability of talent.
In addition to base salary, employers may also need to account for:
- Performance bonuses
- Annual or contractual bonuses
- Shift allowances
- Transport allowances
- Mobile or travel allowances
- Other role-specific allowances
For Singapore companies considering Johor Bahru as an additional hiring location, salary differences may affect the overall cost of certain roles. However, compensation should be reviewed together with statutory contributions, benefits and other employment-related costs.
Employee Benefits and Insurance
Companies in both Singapore and Malaysia may provide:
- Medical insurance
- Outpatient medical benefits
- Annual leave above statutory requirements
- Flexible or hybrid working support
- Other employee welfare benefits
These costs vary depending on company policy, industry, role and seniority.
For professional or specialised positions, employers may also need to provide benefits above statutory requirements in order to remain competitive in the local talent market.
Foreign Hiring Administration and Compliance Costs
Employers hiring foreign employees may also incur immigration, administrative and compliance-related costs in addition to statutory contributions and levies.
Singapore
These may include:
- Work pass application and issuance fees
- Medical insurance
- Medical examinations where applicable
- Security bonds for applicable worker categories
- Administrative and compliance costs
- Other requirements depending on the work pass and sector
Johor Bahru
These may include:
- Employment Pass or other immigration-related fees
- Visa and administrative fees
- Medical examinations
- Insurance
- Security-related requirements where applicable
- Other sector-specific requirements
These costs vary depending on the employee category, work authorisation and applicable sector requirements.
Why Singapore Companies Consider Hiring in Johor Bahru
Johor Bahru’s proximity to Singapore makes it different from many other regional hiring locations. Rather than viewing Singapore and Johor Bahru as completely separate operations, companies can consider how certain functions may be distributed across both locations.
Depending on the business model, a company may retain regional headquarters, commercial functions or client-facing teams in Singapore while building selected operational or support functions in Johor Bahru.
Johor Bahru may be worth considering in several situations.
Expanding Headcount
Companies that need to add a larger number of employees may compare the cost structure of building the entire team in Singapore with operating part of the team in Johor Bahru.
Building Support or Operational Functions
Roles that do not require employees to be physically located in Singapore every day may be suitable for a Singapore–Johor workforce structure.
Potential examples include:
- Customer support
- Operations
- Shared services
- Finance and administrative support
- Supply chain and logistics functions
- Engineering and technical roles
- Digital and back-office functions
Accessing an Additional Talent Pool
Johor Bahru gives Singapore employers access to another labour market rather than relying only on Singapore’s domestic workforce.
This can be relevant when companies are expanding teams, hiring for operational roles or looking for talent that may be difficult to source locally.
Reviewing Foreign Workforce Costs
Companies employing S Pass or Work Permit holders in Singapore may also compare Singapore’s levy and quota structure with the statutory employment costs and foreign hiring requirements applicable in Malaysia.
The objective does not necessarily need to be replacing Singapore-based employees. Instead, companies can assess which roles are best located in Singapore and which functions could potentially be supported from Johor Bahru.
Employment cost should not be the only consideration. Companies should also evaluate operational requirements, legal and employment structures, taxation, immigration requirements and how Singapore- and Johor-based teams would work together.
Summary
Singapore and Johor Bahru operate under different employer contribution systems.
For many local employees, Singapore employers contribute CPF, while employers in Johor Bahru contribute through Malaysia’s EPF, SOCSO and EIS systems, with HRD Levy potentially applying depending on company size. Foreign employee cost structures also differ, with Singapore employers potentially facing S Pass or Work Permit levies and quota requirements, while Malaysia applies its own EPF, social security and foreign worker approval requirements.
For Singapore companies, the decision does not always need to be whether to hire in Singapore or Johor Bahru. A more practical question may be which roles are best kept in Singapore and which functions could be supported from Johor Bahru.
Companies may choose to retain certain functions in Singapore while building selected operational, support or technical functions in Johor Bahru.
The most suitable structure depends on the role, talent requirements, business operations and the company’s employment structure in both countries.
Rather than comparing salary alone, employers should consider the full cost of employment, including statutory contributions, levies, benefits, foreign hiring requirements and other related costs.
Figures and statutory rates in this article reflect information available as of September 2026 and may vary depending on employee age, salary level, nationality, company size, sector and other eligibility conditions.
