The Phenomenon of Minimum Wages and Industrial Competitiveness: A Literature Review

Abstract

Minimum wage setting is a strategic issue in economic development that often sparks debate between worker protection and industrial efficiency. This study aims to examine the relationship between the minimum wage phenomenon and industrial competitiveness through a literature review approach. The method used in this study is a literature study of various scientific journals, research reports, and relevant policy documents, within the last five years. The results of the study indicate that minimum wage increases have the potential to increase worker income and productivity, but without the support of increased productivity, technological innovation, and investment, this policy can put pressure on labor absorption and industrial competitiveness, especially in the labor-intensive manufacturing sector. Comparisons with developed countries underscore the importance of synergy between wages, productivity, and technology to maintain industrial competitiveness. Minimum wage policy reform that integrates inflation, economic growth, and regional productivity in Indonesia is a promising adaptive step, but the main challenge lies in the industry's ability to adapt and innovate. The ethical implications of this study emphasize that minimum wage policies must reflect a balance between social justice for workers and the economic sustainability of the industry.