International Journal of Asian Social Science MINIMUM WAGE LEVEL FROM FEMALE WORKERS PERSPECTIVE: YOGYAKARTA CITY CASE

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1 Internatonal Journal of Asan Socal Scence, 2016, 6(4): Internatonal Journal of Asan Socal Scence ISSN(e): /ISSN(p): journal homepage: MINIMUM WAGE LEVEL FROM FEMALE WORKERS PERSPECTIVE: YOGYAKARTA CITY CASE Abdul Hakm Aref Darmawan 2 1,2 Fakultas Ekonom, Unverstas Islam Indonesa, Indonesa ABSTRACT Female workers play mportant roles n supportng the famly s economy n Indonesa. The roles are even more strategc snce about a half of Indonesan populaton s female. However, the mportant roles of female workers have not been compensated at a decent wage, so that the female worker potentals have not been optmally occuped. Ths has motvated ths paper to buld an emprcal model for determnng the mnmum wage level that female workers are wllng to get. Several factors that are consdered to be the determnants of such a wage level are labor s educaton, type of jobs, access to fnance, skll, as well as entrepreneural sprt. A multple regresson model wll be bult for ths purpose. If these factors are approprately dentfed, polces wll be mposed by the government to determne the optmal wage level for such workers. The result s used to motvate female workers to ncrease ther barganng power facng job offers n varous ndustres. The ncreased barganng power wll be, eventually, followed by an ncrease n ther sklls. Ths s benefcal both for workers and companes that hre them AESS Publcatons. All Rghts Reserved. Keywords: Female workers, Mnmum wage level, Optmal wage level access to fnance, Entrepreneural sprt, Barganng power. JEL Classfcaton: J16, J31, J83. Contrbuton/ Orgnalty Ths study s one of very few studes whch have nvestgated the mnmum wage that female workers are wllng to accept. The paper's prmary contrbuton s fndng that the mnmum wage level s mostly nfluenced by the workers educaton level and the non-salary beneft that they receved from the employers. Correspondng author DOI: /journal.1/ / ISSN(e): /ISSN(p): AESS Publcatons. All Rghts Reserved. 231

2 Internatonal Journal of Asan Socal Scence, 2016, 6(4): INTRODUCTION Female workers play an mportant role n supportng famles n Indonesa. That role comes to be partcularly mportant gven the low ncome of husbands and the hgh nflaton, makng the ncome value even lower from tme to tme. The contrbutons of female workers to ther famles have been sgnfcantly proven. Almost 50% of Indonesa populaton s female, a bg human resource potental n economc development (Statstcs Indonesa, 2013). However, ths potental has not been optmally utlzed. Women contrbute sgnfcantly to the economy and to mprove the welfare of the household and the communty. Ths s demonstrated by the role of women as housewves, as well as ther role n supportng the famly s economy. Today, many Indonesan women do jobs that used to be consdered as for only men who do them lke beng drver, mechanc, laborer, astronaut, and even presdent. Women are tryng to get a job to meet ther needs. Female workers are even nvolved n jobs that normally belong to men (Sheng, 2013). Women consder a varety of factors when decdng to partcpate n the labor market. These factors are marrage status, age, area of resdence (urban or rural), ncome, relgon, educaton level, and ncome level of the husband (for marred) (for dscusson, see (Yakubu, 2010). The government, as state offcals, should care and be able to provde assstance for the poor. Several programs have been launched by the government n ths regard, such as Jamkesnas and Raskn programs. The Jamkesnas program s a socal assstance program of health care for the poor. Each jamkesnas partcpant has the rght for basc health servces ncludng health care (outpatent and npatent), and outpatent health servces are n advanced level, advanced level of hosptalzaton, and emergency servces. The Raskn program s a food subsdy program as an attempt to mprove food securty and provde protecton to the poor famles through the dstrbuton of rce. The rce s expected to reach poor famles so that each famly can buy 10 to 20 kg of rce per month wth a net prce of Rp 1,000 per kg. The mnmum wage polces ssued by the government are not always good for the economy n general. One suggeston s that the government should be neutral, n the sense of not sdng wth one party, namely the workers or employers. If the government s pro-worker, the employer mght have a trouble whch, n the most severe scenaro, shuts down hs company and leads to the termnaton of employment. On the other hand, f the government s pro employer, the mnmum wage wll be really small that devastate the workers. Gven the vtal role of female workers n the economy of the communty n supportng the famly s economy, especally the grassroots populaton, but ther wages are relatvely low, ths proposal plans to analyze the factors that determne the level of mnmum wage that workers are wllng to accept. Ths ssue s of mportance consderng that female workers are stll consdered to be the second class workers, so they receve only margnal wages comparng to those that male workers get. Several factors that are thought to be the determnant are the level of educaton, type of work that does not requre hgh sklls, lmted access to fnance, lack of sklls, as well as the lack of entrepreneural sprt. The locaton of the study s the Muncpalty of Yogyakarta. Nevertheless, t s hoped that ths study wll be replcated n the whole county or other provnces n Indonesa, f t s assumed that the characterstcs of economc structures n these places are not much dfferent from those of Yogyakarta Muncpalty. In addton, ths study confnes tself to the female non AESS Publcatons. All Rghts Reserved. 232

3 Internatonal Journal of Asan Socal Scence, 2016, 6(4): manageral workers. Ths s motvated by the desre to empower the group, whch currently stll has a mnmum level of welfare. If these factors are dentfed, the polces wll be taken by the government to mprove the level of wages receved by female workers. These polces wll nclude development n educaton and tranng system, entrepreneurshp boostng, and access to nvestment funds, among others. In the long term, t s expected that female workers would be able to ncrease ther barganng power to face job offers n varous ndustres. In addton, the ncrease n female workers barganng power s an ndcaton of ther ncreasng sklls, whch are mportant for companes, especally n the sense of human resource development Lterature Revew Researches related to the wages of workers currently focus on the collectve barganng power such as Dobbelaere (2005) and Hrsch and Schnabel (2011). Other topcs covered are genderorented workers' barganng power (Agarwal, 1977) the barganng power of workers n relaton to the captal structure (Kvstrum and Kagerman, 2012) symptoms of labor allocaton and ntersectoral wage compettveness n the monopolstc competton ndustry (Pompermeer, 2003) female workers and demographc transton (Iygun and Walsh, 2007) or n relaton to female workers as housewves (Doss, 2013). Varous problems faced by female workers today are dscrmnaton, sexual harassment n the workplace, overtme work wthout compensaton, neglect of menstrual leave and maternty leave, dsmssal of pregnant workers because the company dd not want to bear the cost of labor, and ther low salares than male labors one. Sometmes, the money should be handed over to father, husband, or n-laws (see Dashora (n.d)). Researches related to female workers are stll a few n Indonesa. The topcs that have been studed nclude female worker's contrbuton to the famly ncome, the mpact of women on famly welfare workers, female workers productvty, as well as the ntensty of female workers. The mnmum wage for female workers perspectve has also been the subject of studes, but the mnmum wage from the perspectve of female workers, as far as the authors concern, has not been carred out, especally n Indonesa, partcularly n the Cty of Yogyakarta. Most women have part tme jobs because they need to look after the young and because they have some socal responsbltes (see Delsen (1998) and Fagan et al. (2001)). That the economc and non-economc motves motvate women to work has been nvestgated by Chang et al. (2013). Usng the method of embedded case study, they found that marred women work for economc and non-economc motves. The contrbuton of female workers and female labor ncome has been nvestgated by Ekong (2008). By usng multple lnear regresson analyss, she showed that age, educaton, experence, and famly responsbltes sgnfcantly affect female workers ncome Theoretcal Background Accordng to Law No. 14 of 1969, Republc of Indonesa, labor s any person who s able to carry out work nsde or outsde the employment relatonshp n order to produce goods or servces 2016 AESS Publcatons. All Rghts Reserved. 233

4 Internatonal Journal of Asan Socal Scence, 2016, 6(4): to meet the needs of the communty. Female workers are females who have regular or contnuous actvtes wthn a specfed perod wth a clear objectve, namely to generate or to obtan somethng n the form of objects, money, servces or deas. Work s defned as an attempt to acheve goals. In terms of economcs, work s defned as an actvty to produce goods or servces, both for hs own use or to obtan a reward. Work s bascally a venue that allows human to express ther deas, create products, and form socal networks. Humans exst not only for themselves, but also for others (Chrstensen, 2007). Female workers have some basc rghts that must be protected (Internatonal Labour Organzaton, 2007). The frst one s the rght to equal payment for equal work. Accordng to the Internatonal Labor Organzaton (ILO), the natonal average wage of women s slghtly hgher than two-thrds of the wages receved by male workers. The second one s the rght to equal opportuntes. Ths means that women have an equal opportunty to compete n all knds of jobs, especally jobs that were prevously not open to women. The thrd one s the rght to be free from dscrmnatory treatment n the workplace. Female workers also have a rght to be free from all forms of nhumane treatment and freedom from dscrmnaton s also enttled to far workng condtons and safety, as well as a decent ncome for themselves and ther famles. Fourthly, the rghts assocated wth reproductve functon. Accordng to Law of Mnstry of Labor No. 1, 1999, Artcle 1, paragraph 1, Republc of Indonesa, the mnmum wage s the lowest monthly wage consstng of basc salary ncludng fxed allowances. Ths wage apples to those who are sngle and have a workng experence of 0-1 years, serves as a safety net, establshed by Decree of the Governor on the recommendaton of the Board Remuneraton and vald for 1 year runnng. Accordng to Artcle 94 of Law No.13 of 2003 on Employment, Republc of Indonesa, wages consst of the basc wage and fxed allowances, whle the amount of the basc wage s at least 75% of the basc salary and fxed allowances. Fxed allowance s an allowance whch s pad on a regular bass and s not assocated wth the presence or of achevement. If a female worker s offered a very low wage, she can choose not to work or do other actvtes that can help her famly. The created unemployment, namely unemployment because workers do not lke the terms of the work contract such as salares, wages, and benefts, s called voluntary unemployment. If unemployment s created because the workers really do not get the job, then he called nvoluntary underemployment. Snce a potental worker wll consder the wage offered by the employer, n ths case the company where she wll work, t s necessary to learn the wage determnaton from the employer pont of vew Wages from Employers Pont of Vew Varous experts examned the behavor of employers n wage settng. Krotz (2011) mentons fve stages n determnng the wages of workers, namely (1) revewng the remuneraton practces that have been done, for example, based on a polcy that has been done so far, (2) defnng the work as clearly as possble, (3) studyng the compettors, namely fellow employers, (4) determnng the salary range that can be gven to certan types of work, (5) makng a salary as a part of a large 2016 AESS Publcatons. All Rghts Reserved. 234

5 Internatonal Journal of Asan Socal Scence, 2016, 6(4): package that also contans other benefts such as nsurance, bonuses, and so on. Lucas (2013) stated that n order to avod losses n determnng wages, t s advsable for the employer to conduct the followng steps. The frst step s takng enough tme to consder the salary rate that wll be offered to the workers. Secondly, the employer should have a good relatonshp wth fellow employers that have nformaton about the level of wages that occurred n a partcular type of work. The thrd step evaluates employees who have worked at your place, and gves salary ncreases based on employee performance, not only by an ncrease n the cost of lvng. Fourthly, n a volatle market, consderng gvng a bonus f t s necessary, because the bonus wll be removed when the stuaton returns to normal. Parker (2013) stated that when companes hre employees, n general, he would pay twce the salary offered. Other components that must be spent by the company are taxes, a varety of benefts such as health nsurance, penson, severance, and varous other addtonal benefts, the cost of tranng and other related expenses. Of the three studes, representng a varety of studes that have been done, t appears that an employer wll attempt to set salary n the most ratonal way. Ths apples both for prospectve employees and employees who have worked a long tme Wages from Workers Perspectve To determne the demanded salary, (Purdy, 2008) suggests workers to look for nformaton about wages n smlar jobs. If workers know for certan the types of jobs they apply for, they should dare to menton the amount of salary. Otherwse, t would be better to wat for an offer. Rynes et al. (2004) ) found that money s not the only motvator and also not a prmary motvator for workers. But they agreed that money s an mportant motvator. They also found that the way employees vew money as ther wages are also nfluenced by a varety of varables such as the varablty of payment as well as the level of performance of each employee. 2. METHODS Ths paper uses prmary data. Intervews and prepared questonnare are expected to encompass a wde range of nformaton about the mnmum wage they are wllng to receve and factors expected to nfluence t. A clear defnte framework of populaton data are dffcult to dentfy because of the nature of the dstrbuton of workers to be nvestgated. However, ths study attempts to fnd the best possble sample data, namely the sample that can be regarded as a representaton of the data populaton. For ths purpose, the sample collecton method used s a random samplng method, whch s one of the probablstc samplng methods. Ths paper randomly select 30 female workers from varous types of job. Intervews, guded by a lst of well prepared questons, are conducted wth the workers. Bo so dong, ambguty n understandng and answerng the questons can be avoded.to obtan the answers consstency from busnessmen and female workers, we wll be bult emprcal models based on nformaton from the aforementoned ntervews and questonnares. Ths analyss tool wll also be able to provde nformaton about sgnfcant varables determnng the mnmum wage from female workers perspectve. The estmated regresson model s s follows: 2016 AESS Publcatons. All Rghts Reserved. 235

6 Internatonal Journal of Asan Socal Scence, 2016, 6(4): MWWR 0 1EDU 2EXPER 3TR 4CW 5BEN 6HI (1) DEP LA NLA FUN INS GS where MWWR EDU EXPER TR CW BEN HI DEP LA NLA FUN INS GS = Mnmum Wage Women Receved (Rp), = Educaton (years of schoolng, starts from elementary school), = Experence (month) = Tranng (days), = Current Wage (Rp) = Benefts other than salary receved by the workers (Rp) = Husband s ncome (Rp) = number of Dependence = Lqud asset (Rp) = Non Lqud asset (Rp) = Other source of fundng, ncludng from relatves (Rp) = Insurance (1 means has an nsurance, 0 means NO) = Government Support (1 means receves government support, 0 means NO) 3. RESULTS AND DISCUSSION The data for ths research covers 30 respondents from varous locatons n Yogyakarta Cty. These respondents work as sales promoton grl n varous malls, and varous non manageral jobs n hosptal and beauty salon. The statstc summary of the data s as follows. The mnmum wage that female workers are wllng to accept ranges from Rp 1,500,000 to Rp 3,000,000 wth the mean of Rp 2,043,333. The current wage that female workers receve ranges from Rp 1,300,000 to Rp 2,000,000 wth the mean of Rp 1,660,000. In addton to the current wage they receved, they also get some benefts n varous ways from ther employer. If the benefts are expressed n Rupah, they range from Rp 125,000 per month to Rp 2,750,000 per month wth the average of Rp 591,666.7 per month. The years of educaton ranges from 12 years (hgh school graduated) to 15 years (graduate dploma), wth the mean of 12.5 years. Ths means that most of them graduated from hgh school. Table-1. Sumary of Varables Statstcs Mnmum Maxmum Mean Beneft 125,000 2,750, ,666.7 Current Wage 1,300,000 2,000, ,000 Dependence Educaton Experence Fundng From Other Sources Government Support 0 1 NR Husband s Income 0 4,000, ,666.7 Insurance Ownershp 0 1 NR Lqud Asset 15,000,000 18,000,000 9,383,333.0 Mwwp 1,500,000 3,000,000 2,043,333 Non Lqud Aasset 0 1.5E+08 8,333,333 Tranng AESS Publcatons. All Rghts Reserved. 236

7 Internatonal Journal of Asan Socal Scence, 2016, 6(4): The experence of workng ranges from 7 months to 226 months wth the average of 67 months (5.5 years). The other key characterstcs of the respondents can be summarzed from Table 1. Usng OLS wth heteroskedastcty consstent coeffcent covarance of Newey-West technque to avod both heteroskedastcty and seral correlaton, we get the followng results. The LM test for heteroskedastcty revealed that the model s free from such volaton. The LM test for seral correlaton revealed that the model s free from such volaton, even though we can say that wth 10% sgnfcance leve, the model suffers the seral correlaton. The result of the estmaton concludes that only educaton, experence, and nsurance ownershp nfluence the MWWP. Table-2. Result of Estmaton of Model 1 Varable Coeffcent t-statstc Prob. C EDU EXPER TR CW BEN HI DEP LA NLA FUN INS GS R-squared F-statstc Adjusted R-squared Prob(F-statstc) Table-3.Whte Test for Heterosckedastcty of Model 1 F-statstc Probablty Obs*R-squared Probablty Table-4.Breusch-Godfrey Seral Correlaton LM Test for Model 1 F-statstc Probablty Obs*R-squared Probablty To get rd of the problem of seral correlaton, and also to ncrease the effcency of the estmaton, we delete the hghly nsgnfcant varables from the estmaton. The remanng model s as follows: MWWR 0 1EDU 2EXPER 3BEN 4DEP 5NLA 6INS (2) 2016 AESS Publcatons. All Rghts Reserved. 237

8 Internatonal Journal of Asan Socal Scence, 2016, 6(4): The LM test for both heteroskedastcty and seral correlaton suggest that the model s free from both classcal assumptons volatons. The estmaton results show that all varables are sgnfcance at 5%, except for DEP whch s sgnfcance at 9%. Table-5. Result of Estmaton of Model 2 Varable Coeffcent t-statstc Prob. C EDU EXPER BEN DEP NLA INS R-squared F-statstc Adjusted R-squared Prob(F-statstc) Table-6.Whte Test for Heterosckedastcty of Model 2 F-statstc Probablty Obs*R-squared Probablty Table-7.Breusch-Godfrey Seral Correlaton LM Test for Model 2 F-statstc Probablty Obs*R-squared Probablty It s clear that educaton s the domnant varable that determnes the mnmum wage female workers wllng to receve (MWWP). Therefore, provdng more educaton to the workers could be the prmary polcy to ncrease the wealth of such workers.experence s also mportant n determnng the MWWP. However, there s nothng we could do about ths varable, snce experence comes wth tme. The beneft that s receved from the employer has a negatve mpact on MWWP. Ths sgn s clearly match wth the expectaton. Ths means that the hgher the benefts, the less MWWP. Ths s because the employees are happy wth low MWWP, as long as they can get hgher benefts from the employer.non lqud asset s also an mportant varable that nfluence the MWWP. The sgn of the coeffcent s postve, whch means that the hgher the non lqud assets, the hgher MWWP they expect. Ths means that the hgher non lqud assets made the workers more confdence to demand hgher MWWP. The ownershp of nsurance s very sgnfcant n determnng the MWWP, wth a postve sgn. Ths s n contrast wth the expectaton. Probably, ths phenomenon can be explaned n the followng way; the ownershp of nsurance made these workers feel confdence that they deserve to have hgher salary, namely MWWP n ths case. 4. CONCLUSION Ths paper nvestgated the nature of female workers n Yogyakarta Cty. It also ntended to model the mnmum wage female workers are wllng to receve (MWWP). It found that the mnmum wage that female workers are wllng to accept ranges from Rp 1,500,000 to Rp 2016 AESS Publcatons. All Rghts Reserved. 238

9 Internatonal Journal of Asan Socal Scence, 2016, 6(4): ,000,000 wth the mean of Rp 2,043,333. The current wage that female workers receve ranges from Rp 1,300,000 to Rp 2,000,000 wth the mean of Rp 1,660,000. In addton to the current wage they receved, they also get some benefts n varous ways from ther employer. If the benefts are expressed n Rupah, they range from Rp 125,000 per month to Rp 2,750,000 per month wth the average of Rp 591,666.7 per month. It found sx varables nfluencng MWWP, namely educaton, experence, benefts other than salary, number of dependence n the famly, non lqud asset, and nsurance ownershp. The varables proven to be nsgnfcant n determnng the MWWP were tranng experence, current wage, husband ncome, lqud assets, fundng from relatves, and government support. 5. ACKNOWLEDGEMENTS The authors acknowledge the fundng receved from Drectorate of Research and Communty Servce (Drektorat Peneltan dan Pengabdan Masyarakat), Unverstas Islam Indonesa, under the scheme of Unggulan Grant, 2014, to complete the research. The frst author acknowledges the funds provded by Board of Academc Development (Badan Pengembangan Akademk), Unverstas Islam Indonesa, to attend the Frst IJCIMBI 2015 n Banda Aceh. The authors would lke to thank to all respondents that provde help n answerng all the questons thoroughly and compassonately. The authors would also lke to thank to partcpants n the frst IJCIMBI 2015 for nsghtful comments and suggestons. REFERENCES Agarwal, B., Barganng and gender relatons: Wthn and beyond the household. Internatonal Food Polcy Research Insttute, Dscusson Paper No. 27: Chang, Y., E.C. Hannum and G. Kao, It s not just about money: Motvatons for youth mgraton n rural Chna. Workng Paper No , Poulaton Studes Center, Unversty of Pennsylvana. Chrstensen, A.M., Dependeng on ethcs: Kerkegaard s vew of phlosophy and beyond. Res Cogtans, 4(1): Dashora, K.B., n.d. Problems faced by workng women n Inda. Internatonal Journal of Advanced Research n Management and Socal Scences, 2(8): Delsen, L., When do men work part tme? In O Relly, J. And C. Pagan (Eds). Part tme prospects: An nternatonal comparson of part-tme work n Europe, North Amerca and the pacfc rm. London: Routledge. pp: Dobbelaere, S., Jont estmaton of prce-cost margns and unon barganng power for Belgan manufacturng. Insttute for the Study of Labor (IZA). Dscusson Paper No. 1466: Doss, C., Intrahousehold barganng and resouce allocaton n developng coutntres. World Development Report, Gender Equalty and Development, Background Paper. pp: Ekong, F., Contrbutons of women to natonal development: Example from Akwa Ibom state. Studes on Home and Communcaton Scence, 2(2): Fagan, C., T. Warren and I. McAllster, Gender, employment and workng tme preferences n Europe. Luxembourg: Offce for Offcal Publcatons of the European Communtes AESS Publcatons. All Rghts Reserved. 239

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