Holiday Intensity and Labor Productivity Challenges

The performance of each individual in Indonesia is still relatively low, so the government must continue to encourage the quality of human resources by improving the quality of education for every citizen.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI.

KOMPAS/HERU SRI KUMORO

Commuterline KRL passengers who have just arrived at Tanah Abang Station, Jakarta, line up to access the exit stairs, Monday (3/7/2023). After taking leave for Eid al-Adha, the workers returned to their normal activities. Public transport and traffic congestion is back.

Long holidays and collective leave are closely related to massive economic movements through tourism activities. However, on the other hand, the relatively frequent frequency of public holidays can have an impact on decreasing productivity business results.

At the end of June, in conjunction with the celebration of Eid al-Adha, the government added two days of collective leave. The holiday fell on Thursday, June 28, and was extended with two additional collective leave days on Wednesday and Friday. As a result, employees, especially those in formal government institutions, only worked for two days that week, which were on Monday and Tuesday.

For a worker, a holiday is always eagerly awaited. This opportunity is usually used to rest from work routines or to travel with family. Along with the school vacation period, the government adds joint leave to allow people to have quality time with their families.

From an economic standpoint, family time which is realized through shopping or traveling activities will drive the economy more massively. Based on the report from the Ministry of Tourism, this goal was quite successful. In a press release from the Ministry of Tourism and Creative Economy entitled The Weekly Brief with Sandi Uno 3 July 2023, the Minister of Tourism and Creative Economy said that the long holiday together had succeeded in increasing bookings for transportation and accommodation by up to three times. The majority of these orders are made through online travel agents.

The number of passengers in the aviation sector is predicted to increase up to 1.25 million. The movement of private vehicles to favorite tourist destinations has also been observed to increase on the day before and the day of Eid al-Adha. This series of tourism activities also contributes to the increase in sales of culinary and souvenir products. Cafes or restaurants, shopping centers, and souvenir shops are flooded with tourists. It can be said that the tourism sector reaps a lot of benefits from the joint holiday policy.

Also read: Four-Day Work Week Reduces Employee Stress and Maintains Productivity

KOMPAS/FERGANATA INDRA RIATMOKO

Tourists queue to buy entrance tickets to the Yogyakarta Palace tourist site in Yogyakarta on Sunday (25/6/2023). Various tourist sites in Yogyakarta are crowded with tourists, predominantly school students. The start of the school holidays, which coincides with the beginning of the Idul Adha public holiday, has encouraged an increase in tourist visits and also pushed up hotel occupancy rates in Yogyakarta.

Businessman protest

However, the joint leave policy did not always receive enthusiastic response. A few days after the government announced the joint leave policy, some business owners expressed strong protests. The sudden joint leave policy can disrupt the workings of business and industries. This is especially true for export-oriented businesses, as production processes can be disrupted causing shipments to be affected.

So far, the joint leave policy has indeed targeted the state civil apparatus or ASN. However, it is possible for private employees to also apply for leave in the same period with the system cutting off the employee's annual leave entitlements. Not a few businesses have to add operational costs for overtime costs in order to catch up with time shifts due to the holidays.

On the other hand, it is considered that the number of holidays will affect the level of productivity of Indonesian workers. This is quite a concern because the productivity of labor is still relatively low. Referring to data from the Asian Productivity Organization (APO) released in 2022, it shows that the productivity level of Indonesian workers is only US$24.4 thousand in 2020.

The basis for measurement around the world refers to the United States' productivity rate of 137.5 thousand US dollars per worker in a year. When compared with these standards, Indonesia's labor productivity has only reached 18 percent of the US. Even at the level of ASEAN countries, the productivity rate of Indonesian workers is still relatively low. Thailand, for example, has a slightly higher productivity level than Indonesia, which is US$30.7 thousand per worker per year or around 22 percent of the US.

For neighboring country Malaysia, its productivity rate is much higher, reaching 54.4 thousand US dollars per worker per year. This proportion reaches 40 percent of the world standard referencing the productivity level of the US. Singapore is the only ASEAN country that is able to surpass the US standard with a labor productivity rate of 150.3 thousand US dollars per year.

Read also: Indonesia's human resources productivity is still lagging behind

Compared to the average productivity of the six major ASEAN countries, Indonesia's achievement is at a lower level. The "ASEAN6" average, consisting of Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, reached 29.4 thousand US dollars per worker per year. Indonesia is only slightly ahead of the Philippines. Overall, Indonesia's productivity position is slightly superior to countries outside ASEAN6 such as Laos, Vietnam, Cambodia, and Myanmar. The productivity level of labor in these four countries cannot reach 20 thousand US dollars.

The productivity figure is calculated by dividing the total Gross Domestic Product (GDP) by the total number of workers in each country. The result will be highly influenced by the number of workers in each country. For Indonesia, although it is classified as a large country with a high GDP level, its large workforce makes Indonesia's labor productivity tend to be lower. Ideally, with a large workforce, the resulting economic value would be greater and continually increasing.

Wages and education

Various parties assess that the relatively low productivity of Indonesian workers is closely related to working hours in Indonesia. Compared to other countries, working hours in Indonesia are relatively shorter, namely 40 hours per week. Working hours in Indonesia are slightly shorter than Singapore, which reaches 44 hours per week. It is much shorter than working hours in Malaysia and Thailand which have higher productivity levels than Indonesia, which is 48 hours per week.

The length of working hours becomes an interesting focus because the wage rate in Indonesia is relatively higher. Referring to Asian Development Bank (ADB) data, Indonesia's wage rate reaches US$299.9 per month. Compared to Thailand, Indonesia's wage rate is higher. The average wage for the Country of the White Elephant is only around 277 US dollars per month.

Even so, it still raises the pros and cons. A number of parties consider that working hours have no effect on the level of labor productivity. There is also an opinion that the longer the working hours, the less effective it will be because it creates a burnout effect. Even the fact of higher wages does not necessarily lead to a reduction in wage rates in Indonesia to match productivity. Decent wages are the right of every worker, but need to be balanced with appropriate work results.

Also read: Economic Uncertainty Can Impact Worker Performance

KOMPAS/ESTER LINCE NAPITUPULU

A number of students at SDN 4 Tanjung, North Lombok Regency, West Nusa Tenggara, on Tuesday (16/5/2023), used their break time to read books in the school library. Schools in North Lombok are starting to rise up to improve the quality of education that was previously affected by earthquakes and Covid-19.

One important factor in boosting productivity is the educational level of workers. The higher the level of education, the more likely their productivity will increase. This also applies in Indonesia. Referring to the publication from the Ministry of Manpower in February 2023, four out of 10 Indonesian workers have elementary school and no education background. Half of the remaining workers are graduates of junior high school and equivalent senior high school. Only about 10 percent are college graduates. Thus, it can be seen that most of the Indonesian workforce have a relatively low level of education.

The lack of awareness to pursue higher education is also evident from the short duration of schooling in Indonesia. By 2022, the average duration of schooling in Indonesia will only reach 8.69 years. Meanwhile, in 2019 the average duration of schooling in Malaysia had already reached 10.2 years, in the Philippines 9.3 years, and in Singapore 11.5 years.

This condition also affects the rank of Indonesia's Human Resources Assessment Index. One of them is the Global Talent Competitiveness Index or GTCI, which is an index measuring a country's competitiveness ranking based on the ability of human resources. In 2022, the GTCI report placed Indonesia at rank 82 out of 133 countries surveyed. This position dropped two ranks from the previous year's report in 2021.

According to the assessment of the ASEAN region in 2022, Indonesia still lags behind neighboring countries, with Malaysia ranking 45th. Indonesia also loses to the Philippines (80), Thailand (75), Vietnam (74), and falls far behind Singapore (2).

The HR ranking shows that Indonesia is still relatively behind from the surrounding countries. Even though the economic value is relatively large in aggregate, the assessment or performance per individual is still very minimal. The government must continue to strive to increase the level of education for all children of the nation so that the quality of human resources can continue to increase in the future. In the economic context, the factors of labor, industry, investment, and technology are inseparable units in efforts to promote the progress of the nation. However, to collaborate all these factors of production to be more optimal and efficient requires reliable human resource skills and is supported by quality education. (R & D COMPAS)