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Labour Absorption In Manufacturing Industry In Indonesia: Anomalous And Regressive Phenomena

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  • Tongam Sihol Nababan
  • Elvis Fresly Purba

Abstract

The manufacturing industry sector was expected to generate new employment opportunities and take on labour. Gradually, however, it emerged as a menace to the sustenance of its workers. According to the findings of this study, 24 manufacturing subsectors with ISIC 2 digits in Indonesia exhibited regressive and abnormal patterns in the period 2012-2020. This suggests that, to a great extent, labour absorption has been limited and, in some cases, even shown a decline. Anomalous occurrences were observed in three subsectors: ISIC 12 (tobacco products), ISIC 26 (computer, electronic and optical products), and ISIC 31 (furniture). In contrast, regressive phenomena were present in the remaining 21 ISIC subsectors. Furthermore, the manufacturing industry displayed a negative correlation between employment and efficiency index, demonstrating this anomalous and regressive phenomenon. This implies that as the efficiency index of the manufacturing industry increases, the index of labour absorption decreases

Suggested Citation

  • Tongam Sihol Nababan & Elvis Fresly Purba, 2023. "Labour Absorption In Manufacturing Industry In Indonesia: Anomalous And Regressive Phenomena," Papers 2311.01787, arXiv.org.
    • Handle: RePEc:arx:papers:2311.01787
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    1. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    2. Rizwanul Islam, 2017. "Structural Transformation and Absorption of Surplus Labour," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 40(3-4), pages 105-136.
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