Labor Productivity Analysis in East Kalimantan Province, Indonesia using The Marvin E. Mundel Method

Abstract

Labor productivity is an important indicator for assessing how efficiently a region's human resources are used to generate economic output. East Kalimantan Province, whose economy still relies heavily on the mining sector while gradually transforming amid the relocation of the new national capital, faces the challenge of maintaining alignment between the growth of Gross Regional Domestic Product (GRDP) and labor absorption across sectors and regions. This study aims to measure the level and index of labor productivity in East Kalimantan Province during the 2022-2024 period, examined at the provincial level, across 17 business field categories, and across ten regencies/cities. The data used are secondary data on GRDP at constant prices and the number of workers published by the Badan Pusat Statistik (BPS). Productivity was calculated using the Mundel method, which compares productivity in the measurement period with that of the base period to produce a productivity index. The results show that the labor productivity index of East Kalimantan Province declined from 1.004 in 2023 to 0.992 in 2024. The sharpest decline occurred in the other services category and in Penajam Paser Utara Regency, while the financial and insurance services sector, real estate, and regencies such as Kutai Timur and Kutai Barat recorded an increase in the index. These findings indicate the need for particular attention to sectors and regions experiencing declining productivity so that regional economic growth remains sustainable and competitive.