||According to constitutional mandate 1945 clause 33, Indonesian national economy supported by three pillars, which are State Owned Enterprises (SOEs), Private and Co-operative society. SOE was expected to drive the national economy by running economic enterprises that manage resources that are fundamental for the many, and pioneering efforts that have not been run by private and co-operative actor. The impact of the existence of SOEs on the national economy will only be maximized, if the state itself is able to operate productively. The more productive operation of SOEs is expected to encourage economic growth and national employment to improve the welfare of Indonesian people. This study aims to predict causality state productivity, economic growth, employment and welfare of society with variable positioning of economic growth and employment as an intervening variable.
This study uses a quantitative approach. Based on study of theory and previous studies the proposed five hypotheses, namely 1. Productivity SOE significant influence on economic growth in Indonesia 2. The productivity SOE have a significant influence on employment in Indonesia, 3. Significant economic growth on employment in Indonesia, 4. Economic growth significant influence on social welfare in Indonesia, and 5. The absorption of labour significantly influence the welfare of society in Indonesia. In this study, SOE productivity was measured using Total Factor Productivity (TFP) SOE aggregate during the period 2002-2008. The value sought by SOE TFP growth accounting approach. Economic growth is measured using the national GDP growth rate. Labour absorption is measured using the total national workforce. Welfare of society is measured using the Human Development Index (HDI). The number of observations in this study is seven years from 2002-2008 and to prove the hypothesis used technique Partial Least Square (PLS).
The test results with PLS model, it is known that all lines have a positive coefficient. But, of the five hypotheses tested there is one that is not significant. SOE productivity does not significantly influence economic growth in Indonesia. The four other hypotheses proved. SOE productivity and economic growth proved to have a significant effect on employment. Furthermore, economic growth and labour absorption proved to have a significant effect on the welfare of the community. These findings suggest that state productivity influences on the welfare of society, consistently occur through absorption of the national labor force, rather than through economic growth