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Wage and Labor Union in Manufacturing Sector


  • Pipit Pitriyan

    () (Department of Economics, Padjadjaran University)

  • Adiatma Y.M Siregar

    () (Department of Economics, Padjadjaran University)


The presence of Labor Unions is expected to provide a higher bargaining power for its members so that the rights of workers can be better acknowledged. In Indonesia, presently, the role of unions is more highlighted in the determination of the minimum wage. This study aims to estimate the the role of labor union on wage determination of Indonesia’s labor intensive manufacturing sector and whether wage differentials occurs among labor union member/non-member of Indonesia’s labor intensive manufacturing sector. Using the SAKERNAS 2007 data, the wage equation concludes that being a labor union member, is associated with higher wage payment received and wage differential between union and union members occurs. Meanwhile, Oaxaca Blinder Decomposition results show us that the wage differential between union and non-union is not negligible, particularly in automotive sector.

Suggested Citation

  • Pipit Pitriyan & Adiatma Y.M Siregar, 2012. "Wage and Labor Union in Manufacturing Sector," Working Papers in Economics and Development Studies (WoPEDS) 201203, Department of Economics, Padjadjaran University, revised Aug 2012.
  • Handle: RePEc:unp:wpaper:201203

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    More about this item


    Wage; labor union; manufacturing;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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