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Indonesian economy has grown significantly for the past quarter ofcentury. However; welfare of the labors are still in a poor condition This wasindicated by their wages which only around the minimum wages, even after thegovernment of Indonesia raised them several times. In the era of globalizationor in a borderless economic framework, factors of productions become moremobile. Mobility of both capital and labor could be driven by comparativeadvantages of local and regional markets. When the wage IE' too lowdomestically, and when there is a high demand for low-skill workers abroad,tlte labor will migrate to higher-wage countries. On the other hands, when thewage is too high in indonesia, foreign investors who invest in footlooseeindustries may relocate their industries to lower-wage countries. In addition,employer can cut down employment to reduce production cast if the wages aretoo high. Titus, the scissor effects have to be dealt wisely. Increasing minimumwages is not the only way to increase worker's welfare. Improving the_productivity of the labor through formal and informal education is an indirectway of raising the welfare of workers. Considering that the quality ofIndonesia's labor is still very low and the fact that factors of production aremore mobile in this globalization era, improving the quality of workers to bemore competitive globally is seen as a key situation to the problem. |
