1.1.

Background
The increase in wages of workers each year is always problematic.
Oftentimes, these problems lead to massive demonstrations that are considered
to be inhibiting the investment into Indonesia. If the review of the writings in the
media (liputan6.com/ 17 Feb 2015) The Ministry of Industry revealed that
Thailand is a major competitor for Indonesia to attract investors. The reason is
the productivity of workers in Thailand is higher than Indonesia although the
minimum wage in the country is lower than Indonesia.
Director General of Development territorial categorization Industry Ministry of
Industry (Ministry of Industry), Imam Haryono said, the level of labor productivity
Indonesia based GDP was US $ 20 thousand per worker. This value is lower when
compared with Thailand which has reached US $ 22.9 thousand per worker. The
average minimum wage labor in Indonesia has reached US $ 226 per month or
about USD 2.7 million, while the wages of domestic workers in the white
elephant country is only US $ 197 per month or about USD 2.3 million with the
exchange rate Rp 12 thousand per dollar. The wages of workers in Indonesia that
high also complained by the business community. According to them, the
increase in wages has not directly proportional to productivity.
However, every year the workers have always wishing a higher wages. The
reason is that the wages received by workers is not balanced and unproportional
by the economic growth in Indonesia. Thus, the economic growth make benefits
and enjoyed only by entrepreneurs. Generally the workers react to some
government policies and levy profits earned by entrepreneurs.
In the last 10 years our purchasing power is at number 10, under the UK. Our
economic growth is at an average level of 6 percent. But simultaneously GINI
ratio also increased, where the level of GINI ratio in Indonesia continues to
increase in the last 3 years. In 2012, the GINI ratio was at 0.36. In 2013 was at
0.39, then in 2014 increased to 0.4, and currently at 0.42. This indicates that on
the one hand our income gap getting higher, but our economy is growing. This
means that the economic growth enjoyed by the upper middle class, while the
lower middle class people like the workers have no impact on economic growth.
Therefore its normal that the workers ask for a sense of justice by conducting
demonstrations to force the government increase wages.
If reviewed further, actually the wishes of the workers is not just the increase
in wages but equitable distribution of profits earned by the company where they
work.
So in this paper we are interested to see how much influence of wage
increase, whether the impact is significant or not, to productivity in all sectors of
employment in Indonesia from the year 2001-2013.
1.2. Formulation of the problem :
a. How much the effect of the increase in wages on productivity in Indonesia
from 2001 to 2013?
b. How much the elasticity of real wages on productivity in Indonesia from
2001 to 2013?
c. How to formulate a new policy to the government as an alternative
solution that is able to increase domestic productivity?
1.3. Purposes
The purpose of this study is:

a. To find out how much influence of the increase in labor wages to productivity
from 2001 to 2013 in Indonesia.
b. To find out how big the elasticity of real wages on productivity from 2001 to
2013 in Indonesia.
c. To assist the government in considering the study of new policies to improve
domestic productivity.
2.1. Concepts and definitions.

In the field of employment, wage is an issue that very interesting to discuss. From the
various dimensions of employment, there is always something to do with wages. Based on Law
No. 13 of 2003 Article 88 point 4 states that "The government set minimum wage referred to in
paragraph (3) letter a decent living based on the need to pay attention to productivity and
economic growth.
Wages itself has a lot of sense. According to Law No. 13 of 2003 Article 1, point 30,
"Wages are the rights of workers / laborers received and expressed in terms of money as a reward
from the employer or the someone who give a job to the worker / laborer assigned and paid by
an employment agreement, agreements, or laws and regulations, including allowances for
workers / laborers and their families for a job and or services that have been or will be done. ".
Dessler (1998: 85) in his book entitled "Human Resources" said that wage is money or anything
related to money that given to employees. Armstrong and Murlis (1994: 7) in the book Practical
Guidelines Payroll System think that wage is the basic pay received by a person, not including
elements of other variable and benefits. According to understandings about wages above was
also clear that the man working for a wage, so the labor cant be separated with wages.
Productivity according Budiyono (2003: 263) simply is the arithmetic comparison
between the amount produced and the amount of each resource that is used throughout the
process. Tohardi (2002: 448) told that productivity is the relationship between the amount of
product produced and the amount of resources that need to manufacture these products or with a
more general formulation is the ratio between satisfactions of needs of the sacrifice given.
Sedarmayanti (2001: 57) points out that productivity is how to produce or increase the yield of
goods and services as high as possible by utilizing resources efficiently.
Based on these opinions we can conclude that productivity is defined as the ratio between
what is produced (output) and enter (input). Specifically productivity means the ability to
produce something that includes increased efficiency and the speed of producing a product that is
the result of a combination of effectiveness, efficiency and economics.
Analisis dan pembahasan

Descriptive analysis aims to give an initial view from the data we used, that is productivity of
employees from 21 sector and wage in quarterly (juni) in Indonesia from 2001-2003. We decide
to use a quarterly data at the month of june because we know that wages are influenced by
inflation and if we use data of wages which has seasonal effect, like december, then the result we
get will have a leak of acuracy and consistency.

Based on those 2 histgoram and output statistic table above, we can see that the minumun value
of productivity from the year 2001-2013 is 164,120, meanwhile the maximum productivity is
490,620 (in thousand rupiah) with average of productivity 289,46238 and standard deviation
107,655077 (in thousand rupiah). While for wages (yang dihitung pada triwulan juni) the lowest
wages from 2001 to 2013 is 497,9 and the highest is 5044 (in thousand rupiah)
Based on this graph 1, we can see that the trend is positive, means that overall,
from year to year, the wages is always increasing. Meanwhile on the graph 2,
although the trend is also positive, productivity from june 2010 to june 2011 drops
dramatically. It happens because (belum nemu penyebabnya)
Analisis inferens
(scatterplot . tabel korelasi)
After having the theoretical basis of the experts and previous research, the next
step is mapping the values of observation of productivity and wages and also to find
out whether there is a relationship caused by the interaction of observations of
these 2 variabels. Based on the scatterplot, it can be seen that the dots form a
pattern generated positive relationship (ride), this is proved by fairly strong
correlation (significant at the level 0.05), which is equal to 0.653. so, we can
conclude that there is a fairly strong correlation between wages and productivity
1. Regression Analysis
After proving the scatterplot and the correlation coefficient is strong enough, we
use a simple linear regression analysis method to find out the causality that occurs,
in how much the variable x in this case real wages, capable of affecting the variable
y (productivity).
(tabel anova)
Based on the Anova table above, we obtained a significance of 0.016 (sig <0.05),
which means that the variable upah_riil turns significantly affect productivity
variables. So that a simple linear regression model, without any follow up method
like transforming or something like that. in this case it is actually fit to apply.
(model summary)
From the summary models above, we can see that the R-square value is equal to
0.426 (42.6%) means that the variation of the dependent variable (productivity) is
able to be explained by the independent variable (upah_riil) to 42.6%, the rest is
explained by other variables outside the regression model.
(coefficient tabel)
in making the model of linier regression we can see from the coefficients table. the
Constant (bo) value = 187 969 with a regression coefficient (b1) = 0.05. which both
have a significant variable in sequence with a standard error is 42.632 and 0.017.
Thus, the linear regression model is:
187.969+0.05*upah_riil

which means that every increasement of 1 unit rupiah in real wages, productivity
will increase by 0.05 thousand rupiah. To find the value of an elasticity of
productivity caused by the effect of the increase or decrease in the level of real
wages, we have to change the model of regression equations into a form of double
logs. Model transformation regression is:

Log(Produktifitas) = 1.628 + 0.255*log(upah_riil)

thus, the elasticity of productivity due to real wage is equal to 0.255. which means
that the percentage of productivity will rise by 0.255% in the event of a 1% rise of
real wages.

Conclusion
1. With the R-square of 42.6%, means that nearly 50% of productivity is influenced
by real wage, while 57.4% is influenced by other variables.
2. The elasticity of the real wages to productivity is equal to 0.255

Suggestions
1. To the owner of the enterprises, it will be best in order to increase the
productivity of workers so that the profits also rised, the wages of workers should
also be improved.
2. The government should be able to not only think about economic growth, but
rather, to think of how well they be able to increase welfare of many people, in this
case they have to make an equal distribution so that everyone can take the
benefits of the economic growth, not only enjoyed by the owners of capitals.
Saran (tambahan no.2)

2. Pemerintah haruslah mampu untuk tidak hanya memikirkan pertumbuhan ekonomi saja,
tetapi lebih kepada bagaimana peningkatan yang baik ini mampu dinikmati oleh banyak
kalangan kecil, bukan hanya dinikmati oleh para pemilik modal saja.