HETEROGENEITY OF WORKER TURNOVER ACROSS REGIONS IN INDONESIA: WHAT IS THE ROLE OF SOCIOECONOMIC?

Abstract

The phenomenon of staff turnover does not always reflect a healthy labour market; high turnover can even be an indicator of job instability, which may lead to reduced productivity, overall economic inefficiency and labour market instability. The aim of this study is to examine how wages, education and regional economic growth influence staff turnover rates. Using a panel data regression approach across 34 provinces in Indonesia over the past six years, the results indicate that socio-economic factors such as education, wages and regional GDP significantly reduce turnover rates, although the effect is still relatively small. Regional GDP consistently reduces turnover rates both in the previous year and the current year. Historical factors, such as high wages and high turnover in the previous year, influence high turnover in the current year. Each province exhibits different effects; provinces with diverse economic characteristics maintain high turnover rates, whilst those with homogeneous and limited economic sectors tend to have lower turnover rates. Measures to reduce turnover include enhancing the quality of human resources through education aligned with industrial needs to minimise mismatches, alongside increasing wages and providing better protection to foster worker satisfaction. This study still has limitations in terms of data and variables; therefore, future research could incorporate other characteristics specific to each province over a longer timeframe