THE EFFECT OF LABOUR STRUCTURE ON OPEN UNEMPLOYMENT RATE IN INDONESIA DURING THE COVID-19 PANDEMIC (CASE STUDY : JAVA ISLAND)

• Main Author: Tri Evasari, Uke
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/56192
• Institution: Institut Teknologi Bandung

The COVID-19 pandemic is spreading very quickly in all countries including Indonesia. The pandemic has had a direct and indirect impact. Direct losses due to the COVID-19 pandemic, namely health problem. Meanwhile, the indirect losses from the pandemic is a decrease in output. The decline in output was cause by a decrease in economic activity due to the movement restriction policy to prevent and reduce the transmission of the COVID-19 pandemic. The decline in output led to a decline in economic performance in each region. The decline in economic performance will differ at the National, Province, district/municipality level because each region has a different economic system. The decline in economic performance has led to an increase in the unemployment rate in Indonesia. The open unemployment rate (TPT) in Indonesia has increased from 4,99% in 2019 to 7,07% in 2020. The increase in the unemployment rate has different effects at the regional and sub regional levels. This difference is due to the differen oft labour structure in each region. One of the islands most affected by COVID-19 pandemic is Java.. This is because the 59% of Indonesia’s economy activity originates from that Island. The shock of economic activity on the island of Java resulted in a significant increase in TPT. The increase in TPT will vary at district/municipality and Province level. To overcome the increase in the unemployment rate, the government issued policies to stimulate the performance of labour market, such as fiscal policy, moneter policy, supporting enterprises, jobs and incomes ILO (2020a). However, these policies not yet optimal because Indonesia’s unemployment rate continues to experience a significant increase during pandemic. Indonesian’s open unemployment rate in August 2020 reached 7,07%, which is a very high number compared to the last five years. Based on this background and problem, the purpose of this study is to analyze the effect of labour structure on open unemployment rate in Indonesia, especially Java Island. There are three targets to be achieved in this research, first is identify economic performance in Java Island, second is identify labour market invi Java Island during pandemic and third is identify the determinants factor on open unemployment rate in Jawa Island. To analyze these targets, this research would use LQ, klassen typology, shiftshare, descriptive and spatial econometrics analysis. LQ, klassen typology, and shift-share analysed used to identified economic performance in Java Island during pandemic. Descriptive analysis used to drawing a condition on labour market in Java Island during pandemic, meanwhile spatial econometric analysis used to identify the determinants factor on open unemployment rate in Java Island. Independent variabel that used in tihis research are economic growth (LP), share young people (YR), Labour Force Participation Rate (LFPR), share people who have the education level of high school or vocational school and lower (EDU1), share people who have a higher education level (EDU2), share of workers in the agricultural sector (share_pertanian), share of workers in the industry sector (share_industi), share of workers in the construction sector (share_konstruksi), share of workers in the trade sector (share_perdagangan), and share of workers in the transportation sector (share_transportasi). To analyze the determinants factor on TPT in Java Island used Geographically Weighted Panel Regression (GWPR). This research uses secondary data. Data used in this research is 118 district/municipality in Java Island in 2019-2020 period. The results of LQ, klassen typology, and shift-share analysis shows that pandemic give e different impact on each distric/municipality. District/municipality that specialize only in certain economic sectors will be more unstable in the face of economic shocks. Descriptive analysis drawing a conclusion that young people groups that were vulnerable to economic shocks. During pandemic, agricultural and trade sector able absorb employment. Meanwhile, other sectors such as transportation and construction severerly affected by pandemic COVID-19. Meanwhile, the assistance needed by workers during pandemic are subsidiy, cash transfer, and others assistance without conditions due to a decrease in income or layoff workers during the pandemic The results of GWPR analysis shows that the determinants on TPT in Java Island are LP, YR, TPAK, EDU1, EDU2, share_industri, share_perdagangan, share_transportasi, dan share_konstruksi. YR, TPAK, EDU1, share_industri, share_perdagangan, and share_transportasi have a significant effect and have a positive and negatife relationship to TPT in Java Island. Meanwhile, LP has a significant effect and has e negative relationship to TPT in Java Island. EDU2 has a significant effect and positive relationship on TPT in Java Island.