Analysis of the Minimum Wage and Production Effect on Employment of Oil Palm Plantation Sector in Sumatra

Abstract

. Oil palm is a commodity that its role is important in the Indonesian economy as a leading commodity, its role tends to increase year by year. This study aimed to examine Pappas and Mark Hirshey’s demand theory derivation in the sector of oil palm plantation in Sumatra Island, employment in the oil palm plantation sector is a derived demand for labor, because the demand is based on the plantation sector developments in Sumatra. This study looked at the minimum wage and production variables effect on employment in the sector of oil palm plantation in Sumatra Island. This study used time series data from 2011 to 2020 per 10 provinces in Sumatra Island. The technique of data analysis used is multiple linear regression with the EViews application. After the examination was carried out, the result showed that the Minimum Wage (MW) negatively and insignificantly affects employment so that the hypothesis is accepted. Production has positive and significant effect towards employment so that the hypothesis is accepted. Simultaneously the Minimum Wage (MW) and production affect employment so that the hypothesis is accepted.