Job Status and Productivity Imparity: Lesson Learned from the Indonesian Workers

Articles in Press

Document Type : Research Paper

Authors

1 Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, West Java, Indonesia

2 Vocational Education Program, University of Indonesia, Depok, Indonesia

3 Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia

10.22059/ier.2024.355692.1007649

Abstract

This study analyses the change in employment status from contract workers to permanent workers on work productivity. Contract employment status is a non-standard employment relationship and often occurs in many countries, including Indonesia. Contract workers generally have weak work protection guarantees and lower wages than permanent workers. Consequently, most contract workers will give their best performance to be appointed as permanent workers. Indonesia Family Life Survey (IFLS) 4 and 5 provide data on employment status transition, which can be a proxy for productivity. The unit of analysis in this study is workers aged 22-64 years at IFLS 5 who are permanent employees. The standard Tobit regression results show that employment status changes were negatively associated with the productivity of permanent workers in 2014. The effect of changing employment status becomes smaller after being controlled by individual and job characteristics variables. We find evidence that education, health status, stress level, job satisfaction, wage, and business sectors as controlled variables are significantly associated with workers' productivity in Indonesia. Good health conditions can reduce the probability of workers not attending work. The empirical findings in this study indicate that the most important thing for workers is not their employment status but the company's sustainability and financial security for the workers themselves in the long term.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 08 September 2024

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