Wage and Labor Union in Manufacturing Sector

Pipit Pitriyan and Adiatma Siregar ()

No 201203, Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University

Abstract: 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.

Keywords: Wage; labor union; manufacturing (search for similar items in EconPapers)
JEL-codes: J3 J5 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2012-08, Revised 2012-08
New Economics Papers: this item is included in nep-lab and nep-sea
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