Indonesian Labour Market Research Articles

Pengangguran dalam Perspektif Ekonomi Islam dan Kovensional: Pengertian, Sebab, dan Solusi

This article discusses one of the employment problems in Indonesia, namely unemployment. This relates to employment management, including conventional and sharia (Islamic) components. The economic and social aspects of people's lives are greatly influenced by where they work. In a sharia (Islamic) perspective, employment and unemployment are aspects of employment issues with certain ethical and moral guidelines. This article discusses and investigates conventional and sharia perspectives on the problem of unemployment, including its definition, causes, solutions and implications for the Indonesian labor market. Researchers used qualitative techniques and library research data to write this article.

The power of e-recruitment and employer branding on Indonesian millennials' intention to apply for a job.

Companies need reliable employees to support their business. As e-grocery businesses in Indonesia continue to grow during the pandemic, various strategies are required to attract millennials. This study aims to prove the influence of employer branding, e-recruitment, and post-pandemic employee value proposition (radical flexibility, deeper connection, personal growth, and holistic well-being) in encouraging millennials to apply for jobs at e-grocery companies after the pandemic. Few e-grocery companies in Indonesia use employer branding and e-recruitment; this study attempts to combine these two variables to see the effect of their interaction on influencing greater millennial intentions. Using the latest experimental method, which is the experimental vignette method, we conducted three studies with a total of 619 millennial participants, who were recruited using the convenience sampling technique. All participants received a set of job advertisements as a stimulus. The results showed that e-recruitment could not significantly predict the millennials' intentions when applying for jobs in e-grocery companies. Companies in Indonesia may need to analyze millennials' familiarity with e-recruitment platforms, especially on company websites. However, employer branding successfully predicted millennials' intention to apply for a job in e-grocery companies, which was not affected by the length of their work experience. Employer branding serves as a means of building job seekers' trust through personal promotions. With this trust, job seekers are more motivated to apply to the company. When e-recruitment and employer branding were analyzed simultaneously, there were significant interactive effects on millennials' intentions. Employer branding acted as a socialization medium to introduce e-recruitment and vice versa. E-recruitment served as a form of branding that could shape the perceptions and experiences of millennial job seekers. Lastly, the employee value proposition significantly predicted millennials' intentions, where holistic well-being was the most sought-after value. It can support employees' well-being and encourage them to make valuable propositions that will make e-grocery companies excel in Indonesian labor market.

The Effect of Educational Mismatch on Wages: A Comparative Study of Migrant and Native Workers

One of the important issues in the Indonesian labor market is an educational mismatch. And one of the implications caused by educational mismatch is that the wages received are unsuitable with the educational qualifications have. This study attempts to relate the educational mismatch phenomenon to the issue of internal migration. Hence, this study aimed to reveal the effect of educational mismatch on the earning of workers, especially migrant and native workers. The discussion of educational mismatch was more specific to migrant workers and native workers because these two types of workers had quite different potential earnings. The data used in this research were gained from the National Labor Force Survey (SAKERNAS) in August 2019. The unit of analysis used was workers with labor/employees’ status other than TNI/POLRI aged 15-64 years and over. The results showed that migrant workers were more likely to experience over education than native workers, and native workers were more likely to experience undereducation than migrant workers. Then, based on the results of the multiple linear regression analysis, it was found that migrant workers encountered greater wage penalties than native workers.

Human Rights and Business: Human Rights Violations in the Outsourcing Industry in Modern Business Indonesia

This article analyzes outsourcing job practice in contemporary business activities in Indonesia, focusing on types and factors that contribute to human rights abuse in the outsourcing business, based on academic literature and regulations on business and human rights. In today's Indonesian labor market, outsourcing jobs are a kind of phantom. Laborers risked not receiving adequate wages, work insurance, or equal bargaining power with the outsourcing company under this job recruitment system. Laborers' associations protested almost every May Day moment, demanding that the outsourcing job system be abolished. They also demanded to be hired directly by the company rather than by the outsourcing firm. Unfortunately, the government responded to the demand by enacting the Workforce Act No. 13 of 2013. This law endorsed outsourcing with specific requirements that provide clear guidance for both employers and employees. However, in practice, companies frequently break outsourcing roles by hiring workers to staff their core business activities. On the other hand, outsourcing corporations also violate the Act's basic rights for outsourcing laborers. As a result, it implies human rights violations. Laborers were frequently threatened with losing their right to a healthy working environment, being fired from their contract without consultation, and having their fundamental rights violated. Human rights violations in outsourcing job activities are primarily caused by a lack of government oversight and law enforcement.

Peta Ketidaksesuaian Kualifikasi Sektoral Di Indonesia

Mismatch is a serious problem in Indonesian labor market. This study aims to determine the qualification mismatch map of the labor mismatch in Indonesia, especially in 5 main sectors with the highest labour force. These sectors are industry, trade, education services, government services and construction. The data used in this study is the BPS National Labour Force Survey (Sakernas) in August 2019. The method used is descriptive statistics through a crosstab table between education level and occupation. The results shows that the qualification mismatch level in Indonesia is 44.8 percent, with 18.83 percent working above their competencies and the remaining 35.48 percent working below competencies. Further, the government administration, defense and social security sectors had the lowest matching rate, which was 25.66 percent. Meanwhile, the sector with the highest matching rate was the education services sector at 72.5 percent.

The determinant of educational mismatch and its correlation to wages

The mismatch between educational and occupational qualifications is an issue that still frequently occurs in the Indonesian job market. This study aims to sudy the probability of educational mismatch in workers and how it was related to the wages received. The data used in this study was gained from the National Labor Force Survey (Sakernas) August 2019. The unit of analysis used are workers that have status as labor/employee/employees who are 15 years old and above. Contingency coefficient analysis was used to investigate the correlation between mismatch and workers’ wages, and multinomial logistic regression analysis was used to investigate the determinants of educational mismatch. The results showed that educational mismatch in the Indonesian labor market was still quite high, in which from a total sample of 178.085 workers / laborers, 25,79% were overeduaction and 17,98% were undereducation. The results of the contingency coefficient showed that there was a correlation between educational mismatch status and workers' wages. Then based on the result of the multinomial logistic regression test, it was found that workers with overeducation status had a greater chance of those who had a longer length of schooling, who were male and urban, while workers with undereducation status had a greater chance of those with shorter school years, who were female and live in rural areas.

What Causes Children to Work in Indonesia?

This study contributes to the existing literature by empirically exploring the causes of child labor in the Indonesian labor market. Factors identified include rate of poverty, average wages, education participation, and quality of education. This study utilized an aggregate data of 301 districts and cities across 34 provinces sourced from the National Labor Force Survey and the National School/Madrasah Accreditation Board of the Republic of Indonesia. Using a multiple regression analysis, the study found strong evidence of the positive effect of poverty on child labor. Conversely, the study documented the adverse impact of average wages on child labor in Indonesia. Similarly, the participation in the education system also contributed negatively to the child labor. Finally, the quality of education services is found to have a negative effect on child labor in Indonesia. The findings of this study suggest that, in efforts to reduce the involvement of children in the workforce, the poverty eradication program should be enhanced. The wages should be continuously improved, at least, in par with the changes in prices. Finally, the quality of education and its services ought to be further enhanced to attract more child student participation rates across junior high schools nationwide.

Marginal Part-Time Employment in Indonesian Labor Market: Profile and Determinant

Abstract: The increase of marginal part-time employment has been found in developed countries, as well as in developing countries. This form of non-standard employment has very short work hours (less than 15 hours/week) and no guarantee of stable employment. In Indonesia, the share of part-time worker amongst working population increased from 15.4 percent in 2009 to 22.1 percent in 2018. Unfortunately, few studies discuss about marginal part-time employment. Using binary logistic regression, this study aims to identify marginal part-time workers based on their socio-demographic characteristic. The result indicates that female (OR: 1.81; 95% CI: 1.75-1.87), living in rural area (OR: 1.12; 95% CI: 1.08-1.16), and less educated are more likely to be marginal part-timer. Therefore, it is recommended for policymakers to ensure the labor regulation adequately protect the rights of part-time worker, so that the workers condition can be improved since they are most vulnerable group in the globalized economy.Keywords: non-standard employment, labor market, part-time, Indonesia Pekerja Paruh Waktu Marjinal Pada Pasar Tenaga Kerja Indonesia: Profil dan DeterminanAbstrak: Peningkatan pekerja paruh waktu marjinal telah teramati pada negara-negara maju dan juga negara berkembang. Salah satu bentuk pekerjaan non-standar ini memiliki jam kerja yang sangat pendek (kurang dari 15 jam seminggu) dan tidak adanya jaminan kestabilan pekerjaan. Di Indonesia, proporsi pekerja paruh waktu diantara penduduk bekerja meningkat dari 15,4 persen pada 2009 menjadi 22,1 persen pada 2018. Sayangnya, hanya sedikit studi yang membahas tentang pekerjaan paruh waktu marjinal. Dengan menggunakan regresi logistik biner, studi ini bertujuan untuk mengidentifikasi pekerja paruh waktu marjinal berdasarkan karakteristik sosio-demografinya. Hasil menunjukkan bahwa perempuan (OR: 1,81; 95% CI: 1,75-1,87), penduduk desa (OR: 1,12; 95% CI: 1,08-1,16), dan kurang berpendidikan berisiko lebih besar menjadi pekerja paruh waktu marjinal. Oleh karena itu, direkomendasikan bagi pembuat kebijakan untuk dapat memastikan peraturan ketenagakerjaan cukup untuk melindungi hak-hak pekerja paruh waktu khusus yang termarjinal agar kondisi pekerja dapat ditingkatkan karena mereka adalah kelompok paling rentan dalam ekonomi global.Kata kunci: pekerjaan non-standar, pasar tenaga kerja, paruh waktu, Indonesia

REGIONAL SKILL DIFFERENTIALS: A STUDY OF THE INDONESIAN LABOR MARKET

This study investigates the patterns and trends in the returns to skill in the Indonesian labor market over the period 2007 to 2013, a period of rising earnings and income inequality. The study takes into account the labor demand and supply across regional development regions and over time. It presents evidence on the returns to skill related to structural changes in the economy through the growth of modern services and the resource boom. It confirms that skill premiums varied across regional development areas. The composition of industries across regions, female labor participation, the proportion of casual workers, the supply of tertiary-educated workers and factors unique to each region are all determinants of the regional skill premiums. The results support the policy focus on developing human capital in Indonesia to meet the rising demand for skilled workers and show the role of the manufacturing sector and minimum wages policy in reducing the skill premium.

The Evaluation of Indonesian Labour Market in Optimizing Demographic Dividend in 2016

Considering the structure of its population, Indonesia has the potential to enjoy advantages that are associated with a demographic dividend in the not too distant future. Nonetheless, there are challenges the country is facing, one of which is the coming into being of the ASEAN Economic Community (AEC). This research describes the state of the labor market in Indonesia to identify how best it can benefit from the demographic dividend, including problems, and how to resolve them. The research uses Multiple Linear Regression with backward elimination method. Re-sults of the research indicated that independent variables in the model showed a negative and significant influence on the economy. To that end, working below 15 hours, and unemployment of the educated are the two most important problems facing in Indonesian labor market. Rec-ommended solutions to the problem is to encourage educated unemployed to participate in Mi-cro and Small Manufactures that deal in processing agricultural commodities to become ready-to-consumer goods.

Women Workers in the Indonesian Labor Market: Inevitable Marginalization

<p>By conducting descriptive statistical analysis and the establishment of two econometric models, this study proves that the marginalization of women in the Indonesian labor market still occurs even though the quality of Indonesian women from the level of education and work participation is increasing. The phenomenon of marginalization of women is characterized by 1) the wage gap due to gender differences, namely the wages received by female workers are lower than male workers for all types of work; 2) the chances of men to find work are far higher than women in the Indonesian labor market. The study concludes that the wage gap due to gender differences is not due to competition in the labor market but rather due to the assumption that working women are secondary and supplementary breadwinners in their households, and the role that they can be play is only an extension of their domestic role. Thus, the main cause of the marginalization of women in the labor market is the low awareness of gender equality, something which has already taken root in Indonesia.</p><p> </p>

Mapping Persons with Disabilities (PWDs) in Indonesia Labor Market

The empowerment of Persons with Disabilities (PWD) has recently attracted the attention of the Indonesian government. Several initiatives have been made to empower their life, especially the establishment of Act No. 8/2016 which enhances their right to inclusive economic activities. This study aims to map PWD in Indonesian labor market. Specifically, it analyzes the characteristics of employed and unemployed PWD. It explored Labor Force Survey (Sakernas), which began to concern on disability issue in 2016. The results show that PWD prevalence varies highly among provinces led by West Sumatera, East Nusa Tenggara, and South Sulawesi and that PWD has lower labor participation rate than that of PWOD. It may indicate the significant presence of discouraged workers among PWD.

The Development of Indonesian Labour Market Information System (LMIS) for Vocational Schools and Industries

This paper is aim to developing Information system for the labor market which specifically linking vocational schools (SMK) graduates and industries. The methods of this application using Research and Development (R&D) from Borg and Gall conducting in North Sulawesi Province in Indonesia. The result are reliable and acceptable for the graduate students. The Labor Market Information system (LMIS) can help the industries to find a labor/graduates that matched with the company requirement at a real time. SMK may have a benefit by extracting the Information from the application, they can prepare their students for the specific work in the industries. The next development of the application will designed to be available not only for the SMK graduate students.

How does the minimum wage affect employment statuses of youths?: evidence of Indonesia

Purpose– The purpose of this paper is to examine the effects of minimum wage on youth employment across employment statuses in Indonesia. This study uses the National Labour Force Survey (Sakernas) from 2010 to 2012.Design/methodology/approach– This study uses a multinomial logit model to see the youth distribution across different employment status changes as a result of an increase in the minimum wage. Five categories of youth employment statuses are examined including self-employed; unpaid family workers; paid employees in the covered sector; paid employees in the uncovered sectors; and unemployed. The model is examined separately for urban and rural areas, as well as for the male and female youth labour market.Findings– The results generally suggest that an increase in minimum wage decrease the probability of youth being employed in the covered sector, i.e. paid employment in the covered sector and increase the probability of youth being employed in the uncovered sectors, including self-employed, unpaid family workers, and paid employment in the uncovered sectors. This study indicates a displacement effect for youths from the covered sector into the uncovered sector as suggested by the two-sector model. The specific results are different across urban and rural labour markets, as well as across males and females.Originality/value– Compared to the developed country studies, the studies on the effects of minimum wage on youth employment in developing countries is relatively limited. The sample from Indonesian labour market with a large informal sector has never been used for these purposes. This study also contributes to the literature by using the particular definition of the covered-uncovered sector to the Indonesian labour market based on the employment status and individual wage data.

Poverty and the Labour Market in Indonesia: Employment Trends Across the Wealth Distribution

‘Poverty and the Labour Market in Indonesia: Employment Trends across the Wealth Distribution’, is among Indonesia’s first papers on the relationship between poverty and the labour market. It provides a detailed analysis of employment indicators (labour force participation rates, hours worked, and type and sector of employment) for the period 2000-2012 across the entire wealth distribution, by location, gender and various sociodemographic characteristics.Despite high economic growth rates, the creation of millions of new jobs, and a strong decrease in poverty rates in recent years, many Indonesians continue to live in poverty even when employed. This paper finds that the poor are as likely as the nonpoor to work, both at the extensive (labour force participation) and at the intensive (number of days and number of hours) margins. The reason for being poor despite being employed is therefore largely driven by other factors.In terms of household structure, clear evidence exists that the working poor need to share their income with a larger household, including economically nonactive members such as young children and the elderly. The higher dependency ratio contributes to their being/becoming working poor. Significant gender differences exist in the Indonesian labour market. Men show higher labour force participation rates and are more likely to work more hours compared with women. However, no strong gender differences were observed when comparing the working poor with the nonpoor.The authors observed that the relative share of the rural working poor as a portion of all working poor has increased over time and that the majority of the working poor are employed in the agricultural sector. Furthermore, the working poor are predominantly and increasingly (in relative terms) concentrated in the informal sector of the economy. An important finding concerns the role of education in the likelihood of being poor or nonpoor. Results also suggest that only the attainment of higher secondary and tertiary education seems to increase the likelihood of being meaningfully protected against poverty.

Salaried employment and earnings in Indonesia: new evidence on the selection bias

This article uses household survey data to estimate the determinants of earnings in Indonesia, a country where nonsalaried work is widespread and earnings data are available for salaried employees only. We deal with the selection bias by estimating a Full-Information Maximum Likelihood (FIML) system of equations, where selection into the labour market is modelled in a multinomial setting. We find that some estimated parameters of the earnings equation differ from a binomial selection procedure by Heckman (1979), in particular for those variables with the strongest impact on the selection into the different labour-market statuses. However, the estimated returns to education are unaffected, even when we deal with the endogeneity of educational attainment following Duflo (2001). Overall, our findings show that the choice of the selection rule affects the estimates of the earnings determinants in the Indonesian labour market.

HOW DOES DECENTRALIZED MINIMUM WAGE SETTING AFFECT EMPLOYMENT AND INFORMALITY? THE CASE OF INDONESIA

The Indonesian labor market is characterized by widespread and growing informality (defined as non‐salaried work). To what extent can the growth in informality be attributed to a sharp increase in the real value of the minimum wage since 2001, when minimum‐wage setting was decentralized to the provincial governments? To answer this and related questions we use survey data on the labor market, on household income and expenditure, and on the industrial sector to construct a district‐level dataset spanning the period 1996 to 2004. The effects of changes in the minimum wage on unemployment, formal‐sector employment, and the incidence of informality in urban areas are estimated by fixed effects with a seemingly unrelated regression estimator. We find that an increase in the ratio of the minimum to the mean wage is associated with a net increase in employment: a rise in informal‐sector employment more than compensates for job losses in the formal sector.

The Indonesian Labour Market: Changes and Challenges

1. Introduction 2. Growth, Employment and Macroeconomic Policies 3. Unemployment and Underemployment 4. Real Wages and Labour Productivity 5. Poverty, Inequality and the Labour Market 6. Labour Market Regulations and the Business Environment 7. Conclusion and a Policy Agenda

FENOMENA LABOR SHIFTING DALAM PASAR TENAGA KERJA INDONESIA

This paper analyzes the labor shifting phenomenon in Indonesian labor market. Labor shifting phenomenon in developing countries, including Indonesia, is considered to be the reason of stable movement from the supply perspective. By using Sakernas data year 1998-2008, this paper analyzes the labor shifting phenomenon, both the direction of labor movement and the characteristics of the shifting labor.The main conclusions obtained in this research are, first, there is no structural break in Indonesian labor market. Second, although most of labors tend to remain in the same sector or intra-sector, the analysis shows there is tendency for the labor to move from non formal sectors especially to Agricultural and Trade sectors. Third, the model estimation result with a series of controlled category shows the biggest three probability of not shifting and remaining in the same sectors are in Electricity sector (70,15%), Financial sector (55,8%) and Mining sector (53,13%). On the other side, the biggest labor mobility opportunity to conduct shifting is on Industry sector (80.14%), Construction sector (64.3%), and Transportation sector (62.4%).JEL classification: J23, J62, J64Keywords: Demand for Labor, Job Mobility, Labor shifting, Unemployment

THE LABOR SHIFTING IN INDONESIAN LABOR MARKET

This paper analyzes the labor shifting phenomenon in Indonesian labor market. Labor shifting phenomenon in developing countries, including Indonesia, is considered to be the reason of stable movement from the supply perspective. By using Sakernas data year 1998-2008, this paper analyzes the labor shifting phenomenon, both the direction of labor movement and the characteristics of the shifting labor.The main conclusions obtained in this research are, first, there is no structural break in Indonesian labor market. Second, although most of labors tend to remain in the same sector or intra-sector, the analysis shows there is tendency for the labor to move from non formal sectors especially to Agricultural and Trade sectors. Third, the model estimation result with a series of controlled category shows the biggest three probability of not shifting and remaining in the same sectors are in Electricity sector (70,15%), Financial sector (55,8%) and Mining sector (53,13%). On the other side, the biggest labor mobility opportunity to conduct shifting is on Industry sector (80.14%), Construction sector (64.3%), and Transportation sector (62.4%).JEL classification: J23, J62, J64Keywords: Demand for Labor, Job Mobility, Labor shifting, Unemployment