DETERMINANTS OF PROVINCIAL MINIMUM WAGE POLICY IN SUMATRA INDONESIA
Published:
2026-10-27Downloads
Abstract
This study aimed to analyze the factors influencing provincial minimum wage policy in Sumatra, Indonesia, by evaluating the impacts of the Human Development Index, inflation, Local Own-Source Revenue, and Gross Regional Domestic Product. The study was motivated by the persistent disparities in minimum wage levels across provinces and the inconsistent findings of previous research regarding the determinants of regional wage policy. A quantitative research approach was employed using secondary panel data from ten provinces in Sumatra during the 2020–2024 period, resulting in fifty observations. Descriptive statistics and panel data regression analysis with the random effects model were utilized, with the Chow test, Hausman test, and Lagrange Multiplier test employed to determine the most appropriate model specification. The results indicated that the Human Development Index exerted a positive and significant influence on provincial minimum wage determination, while inflation had a negative and significant impact. Local Own-Source Revenue showed a positive but insignificant effect, while Gross Regional Domestic Product demonstrated a negative and insignificant effect. The simultaneous analysis revealed that all independent variables jointly influenced provincial minimum wage determination, with the model accounting for 89.07% of the variation in the dependent variable. These findings indicated that the determination of provincial minimum wage in Sumatra was influenced by socioeconomic and fiscal factors rather than a singular cause. Consequently, policymakers ought to evaluate these variables holistically to develop wage policies that promote labor welfare, ensure economic stability, and improve public accountability in regional wage governance.
Keywords:
Human Development Inflation Revenue GRDP Minimum WageReferences
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