Yudita Septia Andini, Luluk Fadliyanti, Vici Handalusia Husni

Analysis of Factors Affecting Labor Absorption in the Small and Medium Industry Sector in West Nusa Tenggara Province in 2019-2023

Introduction

Analysis of factors affecting labor absorption in the small and medium industry sector in west nusa tenggara province in 2019-2023. Analyze investment, production, and minimum wage impacts on labor absorption in West Nusa Tenggara's Small & Medium Industries (2019-2023). Investment & wage significantly boost employment.

Abstract

This study aims to determine the effect of Investment Value, Production Value and District Minimum Wage on Labor Absorption in the Small and Medium Industry Sector of West Nusa Tenggara Province. The type of research used is quantitative research. The data used is secondary data taken from the West Nusa Tenggara Provincial Industry Service. The data collection technique is documents. The data analysis method uses panel data regression using the eviews 9 analysis tool. The panel data in this study is a combination of cross-section data (data from 10 cities/regencies in West Nusa Tenggara Province) and team series data (data from 2019-2023). The results of the data analysis show that the variables Investment Value, Production Value and Provincial Minimum Wage together (simultaneously) have a significant effect on Labor Absorption in the Small and Medium Industry Sector in West Nusa Tenggara Province. Individually (partially), the Investment Value variable and the District Minimum Wage variable have a positive and significant effect on Labor Absorption, while the Production Value variable has a negative and insignificant effect on Labor Absorption in Small and Medium Industries in West Nusa Tenggara Province.

Review

This study, titled 'Analysis of Factors Affecting Labor Absorption in the Small and Medium Industry Sector in West Nusa Tenggara Province in 2019-2023,' addresses a highly relevant economic and social issue: understanding the drivers of employment in the crucial Small and Medium Industry (SMI) sector. The focus on West Nusa Tenggara Province provides valuable regional insights into a vital part of the local economy. The research clearly articulates its objective to determine the effect of Investment Value, Production Value, and District Minimum Wage on labor absorption, utilizing a quantitative approach with secondary data. The selected methodology of panel data regression, combining cross-section data from 10 cities/regencies with time-series data from 2019-2023, appears appropriate for analyzing such dynamic relationships over a recent five-year period. The abstract effectively highlights the key findings, noting that Investment Value, Production Value, and Minimum Wage collectively exert a significant influence on labor absorption. Deconstructing this, the individual analyses reveal that Investment Value and District Minimum Wage both have a positive and statistically significant impact on labor absorption, suggesting that increased capital injection and competitive, regulated wages are conducive to job creation within the SMI sector. However, a particularly intriguing and counter-intuitive finding is that Production Value has a negative and insignificant effect on labor absorption. This result warrants significant discussion and theoretical grounding within the full paper, as it challenges conventional wisdom that increased production often necessitates or correlates with higher employment. Furthermore, there is a slight inconsistency in the abstract regarding 'Provincial Minimum Wage' versus 'District Minimum Wage,' which should be clarified for precision. Overall, this study offers valuable insights into the dynamics of labor absorption in West Nusa Tenggara's SMI sector, providing empirical evidence that can inform regional economic policies aimed at fostering employment. The positive correlation with Investment Value underscores the importance of creating an attractive investment climate. Future iterations or the full paper would greatly benefit from a thorough exploration of the unexpected negative relationship with Production Value, potentially delving into factors like automation, efficiency gains, or changes in production processes that reduce labor intensity. Additionally, further policy recommendations based on the strength of the investment and minimum wage findings, alongside a clear and consistent articulation of the chosen wage variable (district vs. provincial), would enhance the practical applicability and academic rigor of the research. This study lays a solid foundation for understanding critical employment drivers in a specific regional context.

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