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Wage and Labor Union in Manufacturing Sector

Author

Listed:
  • Pipit Pitriyan

    (Department of Economics, Padjadjaran University)

  • Adiatma Y.M Siregar

    (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.

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
    as

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    File URL: http://ceds.feb.unpad.ac.id/wopeds/201203.pdf
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    References listed on IDEAS

    as
    1. Edward J. Schumacher, 1999. "What Explains Wage Differences Between Union Members and Covered Nonmembers?," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 493-512, January.
    2. Maloney, William F. & Pontual Ribeiro, Eduardo, 1999. "Efficiency wage and union effects in labor demand and wage structure in Mexico - An application of quantile analysis," Policy Research Working Paper Series 2131, The World Bank.
    3. Andrew K. G. Hildreth, 2000. "Union Wage Differentials for Covered Members and Nonmembers in Great Britain," Journal of Labor Research, Transaction Publishers, vol. 21(1), pages 133-147, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Wage; labor union; manufacturing;
    All these keywords.

    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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