Authors: Maria Monica Wihardja (World Bank), Hamidah Alatas (Go-Jek)

Abstract: This paper aims to understand better the key dynamics of job creation and job quality in medium and large manufacturing firms as creators of middle-class jobs in Indonesia. There are studies done, mostly studies on productivity, using the manufacturing survey data in Indonesia but this paper is one of the most extensive firm-level diagnostic studies on jobs issues using the manufacturing survey data. This paper contributes to the existing literature by looking in more depths in at least three areas: first, key determinants of employment and productivity growth as well as firm’s survival rates; second, wage-productivity gap, wage premia and how workers share in productivity gains through wages; and third, decomposition analysis of Total Factor Productivity and labor productivity growth. There are important findings emerging from this analysis of job dynamics across the medium and large manufacturing firms, which should help base policy recommendation going forward.

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