LABOR’S ROLE ON INVESTOR ATTRACTION IN INDONESIA

Abstract

To be a prosperous country, Indonesia has created a labor law regulating relationships between enterprises and workers called employment relation/relationship (hubungan kerja), as stated in Law number 13/2003 concerning Manpower. Nowadays, labor law needs to support the growth of global foreign investment considering the positive impact on the recipient country; for instance, the absorbing worker/laborer in the recipient country could use domestic products as raw materials in adding foreign exchange, especially in export-oriented foreign investors can increase state income from the tax sector; exceedingly the shifting of technology and science. The method used was The normative juridical method is used in this research. Therefore, literature study of the legislation provides the data. the Results of The research findings indicate that the consideration factor for an investor to invest his money or capital is the crutial role of labourers who provide consistent high productivity and wages. The willingness of laborer from demanding higher wages annually become significant factor in attracting investment in Indonesia. Moreover, if the labourer presence skilled quality combined with the introduction avanced technology and science/knowledge, greatly influences investor decisions.  Labor's role is critical in Indonesia investment viability. Labour productivity will generate a positive relationship with Foreign Direct Investment (FDI), while the problem of rising wages will harm FDI inflows. Incoming foreign investment will help the government solve the employment problem, for instance, creating job vacancies for both skilled and unskilled labor. In addition, the incoming foreign capital will also introduce new technology and knowledge that is very beneficial for improving the skills of local workers and increasing production efficiency. Then, technological updates and strategic performance will be new to business in Indonesia for economic growth due to incoming foreign investment. People can copy and modify these novelties to create more capital in the country in the future.