Labor productivity is one of the benchmarks to see the efficiency and effectiveness of inputs in a country's economy. Indonesia, which is still ranked in the middle among other ASEAN countries, has a number of challenges in increasing labor productivity. One of the big issues that needs attention is workforce flexibility in Indonesia. This month's LPEM labor brief will discuss this.
Conditions of Labor Productivity in Indonesia
For the next few decades, it is predicted that Indonesia's population will still be dominated by people of productive age, namely those who are in the optimal age range to actively contribute to economic activities. This raises the issue of optimizing labor productivity
is very important in development.
Labor productivity refers to the effective use of labor in the production process of goods and services. Labor productivity is calculated by comparing the amount of output produced with the units of labor used as input. In other words, productivity can be defined as the amount of output that can be produced by each worker during a certain period of time. This concept is important in measuring economic performance both on a small scale, such as companies, and on a larger scale, such as countries. When labor is able to produce more output using the same or fewer resources, this increases overall efficiency and economic performance.
Even though Indonesia is blessed with abundant labor potential, labor productivity in Indonesia still requires a number of improvements. This is because, compared to other ASEAN countries, labor productivity in Indonesia is still in fifth place with each worker able to earn 26.328 dollars in 2023.
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