Moving to the Services Sector, Can they Reach the Minimum Wage? The 2021 Indonesian NLFS Data Analysis-Based Study

Abstract

Objective: This study provides an overview of labor shifting from the manufacturing sector towards the services sector in Indonesia. Method: Data from the 2021 National Labor Force Survey (NLFS) were used to track laborers' characteristics with 1,856 sample size of labors in the services sector who previously worked in manufacturing industries in Indonesia. A descriptive statistics method was employed for analysis by utilizing cross-tabulation data. Results: This sectoral transition from manufacturing to the services sector indicates a decrease in labor absorption in Indonesia's manufacturing sector, which has occurred since The Asian Financial Crisis in 1997-1998. It was also obtained that the majority of these "new workers" in the services sector are in the category of position/skill level 2, namely jobs with several skills such as clerical support workers, services and sales workers, skilled agriculture workers, forestry and fishery workers, craft and related trades workers, plant and machine operators and assemblers. In addition, only 24.27% of respondents earn more than the minimum wage applicable in the district/city where they live, and 14.31% earn above the Indonesian middle-class standard set by the World Bank (> IDR 3,752,000 per month).