Investigating wage bargaining power, wage inequality and industrial structure in Indonesia

This study aims to investigate the labor bargaining power over wages and the wage inequality among industries based on the industrial structure in Indonesia. In this study, Panel Data Model is used and supported by secondary data from 2008-2015. This study argues that wage inequality really matters among the industries and tends enlarge among them although the bargaining power of labor over wage probably exists. Findings/Originality: This study has also shown a critical point for government's industrial policies in the developing countries which are highly concerned with the labor wage bargaining power and wage inequality issues, particularly in Indonesia. It suggests that the government plays important role in making better and in making equal fair wage level between industries, particularly demand for labor (demand side) and supply of labor (supply side) of each industrial classification is highly needed. More educational strategies aimed at increasing labor capacities through specialization programs can potentially help establish a superior state of labor bargaining power over wage and the fair wage level of the industries in the labor market, particularly in S and M Industries.