Surabaya — Economic growth alone does not always determine employment expansion at the regional level. A recent study reveals that education levels and minimum wage policies influence labor absorption differently depending on local economic structures.
The research examines employment dynamics in Mojokerto and Jombang Regencies between 2010 and 2024. Using economic growth rates, education levels, and minimum wage indicators, the study explores how these variables shape regional labor absorption patterns across two districts with distinct economic characteristics.
Labor absorption is widely recognized as a key indicator of regional development performance. Higher employment capacity reflects stronger economic opportunities and improved public welfare. However, the findings suggest that economic growth does not automatically translate into job creation.
In Mojokerto Regency, economic growth was found to have no significant impact on labor absorption. This condition reflects the dominance of capital-intensive and technology-driven industries that increase production output without proportionally expanding employment opportunities.
Education level, however, showed a strong positive and significant influence on labor absorption in Mojokerto. Improvements in average years of schooling contributed to stronger workforce quality and better alignment with industrial labor demands. These findings highlight education as a strategic driver of regional employment growth.
Meanwhile, the minimum wage variable in Mojokerto did not significantly affect labor absorption. This suggests that industrial employment decisions in the region rely more heavily on productivity considerations than wage adjustments.
A different pattern emerged in Jombang Regency. Similar to Mojokerto, economic growth did not significantly influence employment absorption. This indicates that economic expansion alone is insufficient to create substantial job opportunities without supportive sectoral transformation.
Education level also showed no significant impact on employment absorption in Jombang. The study suggests that skill mismatches between graduates and labor market needs may limit the effectiveness of educational improvements in expanding employment opportunities.
In contrast, minimum wage levels had a strong positive effect on labor absorption in Jombang. Higher wages increased household purchasing power, which stimulated consumption and encouraged local economic activity. This expansion of economic demand contributed to increased employment opportunities.
These contrasting findings demonstrate that employment policies must consider regional economic characteristics rather than applying uniform strategies nationwide. Local industrial structures, workforce quality, and consumption patterns significantly shape labor absorption outcomes.
The study also emphasizes the importance of strengthening labor-intensive sectors to support employment growth in regions dominated by capital-intensive industries. Without such strategies, economic growth may continue to occur without meaningful job creation.
Improving alignment between education systems and labor market needs is another key recommendation. Vocational training programs, internships, and competency certification initiatives can help reduce skill mismatches and enhance workforce readiness.
Adaptive minimum wage policies are also essential. In some regions, wage increases stimulate employment through consumption expansion, while in others their impact remains limited due to structural industrial differences.
By adopting region-specific employment strategies, policymakers can improve labor absorption performance and strengthen long-term economic resilience. Evidence-based planning is therefore essential for building inclusive and sustainable regional labor markets in Indonesia.
The study was published in the International Journal of Scientific Multidisciplinary Research (IJSMR) using multiple linear regression analysis based on official statistics from 2010–2024 to examine employment dynamics across both districts.
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