Economic experts have recently evaluated the limitations of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia regarding their ability to provide fair wages. During the CNBC Indonesia Economic Outlook 2025 event, senior economist Raden Pardede indicated that MSMEs may not be effectively positioned to stimulate economic growth, primarily due to challenges associated with ensuring equitable compensation for their workers. He emphasized the importance of large corporations in contributing to the creation of quality job opportunities.
Challenges Faced by MSMEs
Professor Dr. Sri Herianingrum, an economic expert from the Faculty of Economics and Business at Universitas Airlangga (UNAIR), supported this view. While acknowledging the considerable role of MSMEs in business growth and employment, she pointed out that many such enterprises struggle to adhere to minimum wage standards.
“MSMEs indeed play a crucial role in employment and business proliferation. However, many of them still face significant challenges in meeting minimum wage requirements,” stated Professor Herianingrum.
The Impact of Profit Margins on Wages
The conversation around lower profit margins affecting wages in MSMEs is prevalent in economic discourse, with many employees earning below the established wage thresholds. Although MSMEs have demonstrated resilience during economic downturns, Professor Herianingrum emphasized that they cannot be solely depended upon to foster sustainable economic development.
Advocating for Larger Enterprises
She advocated for the expansion of medium and large-scale enterprises capable of offering fair wages and improved working conditions to facilitate more inclusive economic progress.
The Role of Digitalization
Moreover, Professor Herianingrum noted that the resilience of MSMEs, particularly within the textile and fashion industries, is enhanced by access to locally sourced raw materials. However, she underscored the importance of digitalization for the long-term sustainability and growth of these enterprises. She identified digital transformation challenges in regions where MSMEs are prevalent, linking them to inadequate internet infrastructure.
“Digital literacy must be prioritized. Without sufficient knowledge, MSME entrepreneurs will struggle to leverage technology for business growth. Furthermore, unequal internet access across different regions must be addressed promptly,” she concluded.
Author: Rosali Elvira Nurdiansyarani
Editor: Khefti Al Mawalia
Source: https://unair.ac.id/en/economic-experts-highlight-msmes-limitations-in-providing-fair-wages/
