Role of MSME in Absorbing Labor and Contribution to GDP

The purpose of this study is to analyze the role of MSMEs in absorbing labor and its contribution to GDP in Indonesia. The type of data used is secondary data from the Central Statistics Agency (BPS) and the Ministry of Cooperatives and MSMEs. The analytical method used is descriptive statistic. The results showed that the average number of UMKM labor was 112,709,244 or 97.03%. Micro-businesses absorbed 92% of the workforce, 5% of small businesses and medium-sized businesses were 3% of the total MSMEs workforce. The average contribution of MSMEs to Indonesia's GDP during the 2012-2017 period was Rp.5,928,934.98 billion or 59.74%. Microenterprises contributed the most, 61.05%, smallenterprises 16.20% and mediumenterprises at 22.75% of the total GDP of MSMEs.


INTRODUCTION
Indonesia as the 4th country with the largest population in the world is a potential capital if it can improve the quality of human resources. Based on the results of the population census in 2010, the total population of Indonesia was 237,641,326 people, living in cities as many as 118,320. 256 people (49.79%) and in rural areas 119,321,070 people (50.21%) with a population growth rate of 1.49%. The results of the Central Bureau of Statistics projections/Badan Pusat Statistik (BPS) , the population of Indonesia in 2020 increased to 271,066,400 people (BPS, 2019c). However, on the other hand, the size of the population can be a problem for Indonesia if it is not able to make good use of it because it will be a prolonged problem such as the shortage of jobs that result in unemployment which can hamper national economic growth.
Previous research shows that problem of unemployment and economic growth is a national problem that occurs in almost all countries, especially in developing countries like Indonesia (Dagli & Dagli, 2015;Golub & Hayat, 2014;Moscarini & Postel-vinay, 2017;Mundle, 2017). Employment is closely related to employment opportunities, namely the ability of available employment to absorb the existing workforce. In general, the understanding of the labor force is a population of productive age, ie 15-64 years who are working or looking for work. Productive age can be classified into two: (1) Not a workforce, for example, students and students who are still in school. (2) The workforce is the productive age population who already has a job or is looking for work.
The definition of labor is related to people who can work to produce goods or services and have economic value that can be useful for the needs of the community (Yacoub, 2012). Whereas based on the Law. No. 13 of 2003 concerning manpower, labor is every person who can do work to produce goods and services, both to meet their own needs and for the community. In Indonesia, the working-age population according to Central Bureau of Statistics/Badan Pusat Statistik (BPS) standards is 15 years and above.
The high number of labor force that is not followed by an increase in employment has resulted in increased unemployment. The unemployment rate according to (Sumarsono, 2009) "the percentage of the unemployed number of the workforce". While unemployment can be interpreted as a condition when someone belonging to the labor force wants to get a job yet to get it (Sukirno, 2000). According to (Mankiw, 2006), unemployment is a person who does not have a job, or is preparing a new business. The Central Bureau of Statistics projections/Badan Pusat Statistik (BPS) defines unemployment as residents who are not working, are looking for work, are preparing, businesses or residents who are not looking for work because they feel it is impossible to get a job or who already have a job. While the unemployment rate is a comparison between the number of unemployed and the number of the workforce in period expressed in percentage terms. One type of unemployment that is often used as a benchmark in calculating the unemployment rate is open unemployment, which consists of: (1) Do not have a job and find a job. (2) Not having a job and preparing a business. (3) Not having a job and not looking for a job, because they feel it is impossible to get a job. (4) Already have a job but not yet started working (BPS, 2019a). Based on report of Central Bureau of Statistics, the unemployment rate in Indonesia is fluctuating, in August 2012 6.13%, increased in the same month in 2013 to 6.17%, while the following year decreased to 5.94%, in August 2015 has increased to 6.18%. However, it has again declined for two years in a row of 5.61% in 2016 and 5.50% in 2017 and decrease in 2018 become 5,34% (BPS, 2019b). The unemployment rate is caused by First, the lack of employment, resulting in a gap between the number of the workforce and existing employment. Second, the low level of education, even though there are specific criteria regarding the minimum level of education that must be met for certain jobs. Third, the influx of foreign labor makes competition even tighter even to the level of unskilled laborers. There are at least two bad effects of unemployment: the first is the bad effects on the economy related to economic growth. secondly, adverse effects on the individual concerned and social such as loss of livelihoods and income, loss of expertise because they are not used anymore, and cause social and political instability (Sukirno, 2000).
Unemployment rate have an impact on national economic growth. Arsyad defines economic growth as an increase in Gross Domestic Product (GDP) regardless of whether the increase is greater or smaller than the rate of population growth and whether there is a change in economic structure or not (Arsyad, 2010). Economic growth is a condition of the number of goods and services has increased in an economy (Sukirno, 2000). The existence of economic growth in a region will cause the region to experience development, besides that economic growth that continues to increase and be sustainable is important to support economic development.
The indicator of economic growth that is used in almost all countries is the Gross Domestic Product (GDP), so that GDP is referred to as the "godfather" of the world indicators. Gross Domestic Product (GDP) is the value of goods and services produced during a certain period. GDP that is calculated based on constant prices is called nominal GDP and GDP that is calculated based on current prices is called real GDP (Mankiw, 2006). Some of previous studies shows, Okun A. M's study (1962) found that there was a negative relationship between the unemployment rate and GDP which came to be known as Okun's Law (Okun, 1962). Okun found that the unemployment rate decreased when the real growth rate was high, while the unemployment rate increased when the real growth rate remained low or even negative (Soylu, Çakmak, & Okur, 2018). Research results show that Okun's law applies in Indonesia, where the Okun coefficient is negative, meaning that the unemployment rate tends to increase along with the achievement of GDP growth (Darman, 2013). Research by Soegner and Stiassny also proves that this law is valid, the results of his study show a negative relationship between the unemployment rate and real GDP (Soègner & Stiassny, 2002). Noor also researched the existence of Okun's law in the Malaysian economy, the result they found that there was a negative relationship between output and unemployment, the coefficient level obtained was -1,748 (Noor, Nor, & Judhiana, 2007). The fall in GDP caused by the unemployment rate because someone unemployed has no income, so the purchasing power and demand for goods and services decreases, consequently the consumption component in GDP also falls, besides the absence of income causes someone to reduce economic transaction activities, this causes income reduced government tax.
Based on previous studies it can be concluded that unemployment is one of the determinants of economic growth, for accelerate the rate of economic growth / GDP it must reduce the unemployment rate. Meanwhile, GDP is an indicator of economic growth that must be increased to achieve sustainable economic development for the welfare of the people of a country (Andresen, 2015;Khumairoh, Aida, Qomariah, & Nasir, 2018;Pratama & Utama, 2019;Sarjono, Anwar, & Darmansyah, 2018;Siti Fatimah, 2015).
Efforts to overcome the problem of disparity between the number of jobs with the number of labor force and the problem of economic growth can be done by encouraging the development of Micro, Small and Medium Enterprises (MSMEs). Based on Law No. 20 2008 concerning MSME principles and objectives of MSME empowerment states that the objectives of empowering micro, small and medium enterprises are: (1) Creating a balanced, developing and equitable national economic structure. (2) Growing and developing the ability of micro, small and medium businesses to become strong and independent businesses. (3) Enhancing the role of micro, small and medium enterprises in regional development, job creation, income distribution, economic growth and alleviating people from poverty. As for what is meant by MSMEs based on Law No. 20 of 2008 concerning Micro, Small and Medium Enterprises are: (1) Micro Enterprise is a productive business owned by individuals and / or individual business entities that meet the criteria for Micro Business as stipulated in this Law. (2) Small Enterprise is a productive economic business that is individually owned, carried out by individuals or business entities that are not subsidiaries or not a branch of the company that is owned, controlled, or is a part either directly or indirectly of medium-sized businesses or large businesses that meet the criteria Small Business as referred to in this Law. (3) Medium Enterprise is a productive economic business that stands alone, which is carried out by an individual or business entity that is not a subsidiary or branch of a company that is owned, controlled, or becomes a part either directly or indirectly with a Small Business or large business with a total wealth net or annual sales results as provided for in this Law (Fajar ND, 2016). The criteria of Micro, Small and Medium Enterprises (MSMEs) based on assets and turnover can be seen in Table 2. MSMEs in the Indonesian economy cannot be underestimated, MSMEs are an integral part of the business world and are a people's economic activity that has a position, role and strategic potential in creating an economy based on democracy (Fajar ND, 2016). UMKM has a strategic role as contained in Law No. 20, 2008 Chapter III article V" Enhancing the role of Micro, Small and Medium Enterprises in regional development, job creation, income distribution, economic growth, and alleviating people from poverty" (Republic Indonesia, 2008). The role of MSMEs in the Indonesian economic system is not new, the MSME business sector as an independent business that does not depend on funds from banks has been able to survive when the 1998 crisis, not only able to survive, MSMEs became the engine of the economic engine and are able to absorb relatively high labor force with small capital requirements.  This proved that MSME was a healthy business, able to survive amid many companies went bankrupt due to the unstable global economic conditions at that time. After surviving the 1998 crisis, the number of MSMEs has continued to increase. In 2003 of around 40 million business operators in Indonesia, 99.5% were MSMEs (Krisnamurti, 2003). While in terms of employment, the SMEs can provide 97% of employment opportunities for the community (Bobo, 2003).
Based on the latest data released by the Ministry of Cooperatives and MSMEs related to the development of MSMEs in the 2012-2017 period, it shows that 99.9% of businesses in Indonesia are included in the MSMEs category, while large businesses (LB) are only 0.01%. Every year the number of MSMEs increases even from 2012 to 2017 increasing by 13.98% or as much as 7,716,172 units, while large businesses (LB) only experienced an increase of 10.26% or as much as 508. The data shows that the number of MSMEs in Indonesia is very significant when compared to large businesses (LB), so MSMEs must be encouraged and accommodated to create jobs so that they can absorb labor to reduce the unemployment rate and increase economic growth.The role of MSMEs in the economy is not only in Indonesia, but in other countries such as India also shows the role of MSMEs as the driving force of the economy (Shukla, Meena, Asthana, & Pareek, 2016;Shukla & Nerlekar, 2016). The empirically, there are several obstacles faced by MSMEs which still appears today: (1) Limited capital and access to finance. (2) The quality of human resources is not yet professional (3) Limited market access. (4) Mentality of MSME entrepreneurs. (5) The business climate is not conducive. (6) Business facilities and infrastructure are still lacking. (7) technology use is still low. (8) limited information access. Researchers also found that MSME had problems in marketing, this was due to the absence of branding, besides that bookkeeping was also still manual, there were even some businesses that did not do financial accounting. The purpose of this study is to describe the size of the role of MSMEs in the Indonesian economy. Especially in absorbing labor and its contribution to GDP. The implication of this research is that the Government must be able to accommodate MSMEs considering the role of MSMEs in the Indonesian economy. Hence, it becomes a reference for the government in empowering MSMEs.

RESEARCH METHODS
The research used a quantitative approach. The type of data used in this research is secondary data. Analysis tool using SPSS. Data obtained from the Ministry of Cooperatives and MSMEs. The data used is the number of MSMEs labor and GDP of MSME during the 2012-2017 period. The analytical method used in this study is quantitative descriptive analysis. Descriptive research aims to explain an event, situation, object in the form of people, or everything related to variables that can be explained using numbers and words (Punaji, 2010).

RESULTS AND DISCUSSION
The Role of MSMEs in Absorbing Labors, based on data from the Ministry of Cooperatives and MSMEs released on the official website of the Ministry of Cooperatives, in 2012 MSMEs were able to absorb 97,24% of the total workforce of MSME + large-enterprises (UB), totaling 101.722.458 people, of which 93,35% worked in the micro-enterprises sector, 3,85% in the smallenterprises sector and 2,80% in the mediumenterprises sector. Furthermore, in 2013 the number of MSME labor increased by 5,51% to 107.657.509 people, 92,76% of them worked in the micro-enterprises sector, 4.21% in the smallenterprises sector and 3,03% in the mediumenterprises sector.
In 2014 the workforce of MSME increased again by 5,68% to 114.144.082 people, 91,66% of the total workforce of MSME work in the microenterprise sector, 4.88% in the small-enterprise sector and 3,46% in the sector medium-enterprise, then in the following year namely 2015 MSME labor increased again by 7,37% to 123.229.386 people with details of 89,92% working in the micro-enterprise, 5,93% in the small-enterprise sector and 4,15 % work in the medium-enterprise sector. But in the following year, 2016, MSME experienced a significant decrease in labor, namely 9,22% so that the MSME workforce in 2016 became 112.828.610 people, 92,03% worked in the micro-enterprises sector, 4,79% worked in the sector small-enterprises and 3,18% work in the medium-enterprise sector. In the following year, 2017 UMKM labor increased again although not too significant at 3,30% so that the UMKM workforce numbered 116.673.416 people, with details of 91,91% of them working in the microenterprise sector, 4,89% working in the sector small enterprise and 3.20% work in the mediumenterprise sector.
The period of 2012-2017, the average number of micro-enterprise labor was 103.553.608,50, small-enterprises 5.406.681,667 people and medium-enterprises labor was 3.748.953,667. Hence, rom 2012 to 2017 the average number of MSME labor was 112.709.244 people or around 97,03%, micro-enterprise was the sector that absorbed the most labor, namely around 92%, then the small-enterprise sector by 5% and the medium-enterprise sector amounting to 3% of the total MSME workforce. During this period an increase in the number of MSME labor reached 14,70% or as many as 14.950.958 people, of which micro-enterprise experienced a growth of 82,10%, small-enterprise by 11,93% and mediumenterprise by 5,96%.  Based on the data and the results of the descriptive analysis above it was found that the role of MSMEs in absorbing labor is very large, where micro-enterprise absorbs the most labor followed by small and medium enterprises. There is a difference in the number of labor in each enterprise because the numbers are far different, where the number of micro-enterprise is the most, then followed by small-enterprise and mediumenterprise. This fact can certainly be a solution for the government to overcome the disparity between the workforce and the workforce because the workforce is increasing every year by optimizing the potential of MSMEs in Indonesia, thus the unemployment rate can be reduced as low as possible.
Contribution of UMKM to Gross Domestic Product (GDP). Based on data from the Ministry of Cooperatives and MSMEs released on the official website of the Ministry of Cooperatives (depkop.go.id) shows that the contribution of MSMEs to national GDP is very large and is increasing every year. The high contribution of MSMEs to GDP due to the significant number of MSMEs has even become the driving force for the economy in Indonesia. 6.228.285 billion. In 2016 the contribution of MSMEs to GDP was Rp.7,009,283 billion, an increase from the previous year of 11,14%, and in 2017 it increased again by 9,03% so that the contribution of MSMEs to GDP was Rp.7.704.635,90.
For discussion. Based on the presentation of the analysis results about the role of MSMEs in absorbing labor and its contribution to GDP above. It is interesting for discussion. According to data from the Ministry of Cooperatives and MSMEs released on the official website of the Ministry of Cooperatives (depkop.go.id) shows that the role of MSMEs in absorbing labor in Indonesia is very large, although it is fluctuating, the trend is increasing. This is because the number of MSMEs is significant when compared to other sectors such as large businesses (LB). The high number of MSMEs automatically opens new jobs because it requires labor to manage the business. However, Some previous studies also showed that the role of MSMEs in absorbing the workforce was indeed significant (Arifin, 2017;A. H. Putra, 2016;Sofyan, 2017;Suci, 2017;Wahyuni, 2018). Furthermore, The role of MSMEs is also very large in other countries such as India, Thailand, the Philippines, Malysia, Africa and America (Mahboob, Vichayanan, M, & Abusayed, 2017;Rahman, Yaacob, Busneti, & Tambunan, 2016;Rathore & Mathur, 2019;Shukla & Nerlekar, 2016;T. ulus T. Tambunan, 2019).
Data from the Ministry of Cooperatives and MSMEs shows that micro-enterprise is the sector that absorbs the most labor, on average for the period 2012-2017 there were 103,553,608.50 people or around 92% of the total MSME workforce, then small-enterprise sector amounted to 5,406 .681,667 people and medium-enterprises labor was 3,748,953,667 people. This is supported by the fact that the number of micro-enterprises is the most when compared to the small-enterprises, medium-enterprises and large businesses sector. However, the government must be able to encourage the micro-enterprises sector to develop into a medium-enterprise and even become a largeenterprises, to be able to compete in national and international markets. Especially after the entry into force of the MEA makes competition in all sectors more stringent. Therefore SMEs must also be prepared to face international market competition (Julita, 2017;Julita & Sari, 2015;Marpaung & Pardede, 2018).
On the other hand, MSMEs have contributed to economic growth. As we known, increasing economic growth is a goal that is achieved by all countries including Indonesia. The indicator of economic growth that is commonly used by countries in the world is GDP growth. One of the sectors that contributed the most to Indonesia's GDP was Micro, Small and Medium Enterprises (MSMEs). Based on the data and analysis results above, it is found that the contribution of MSMEs to Indonesia's GDP is very large and increases every year.
During the 2012-2017 period, microenterprises were the largest sector contributing to MSMEs GDP, which was an average of 61.05% of the total MSME GDP, this is reasonable given that the number of micro-enterprises is the largest sector in Indonesia, then followed by medium-enterprises with an average contribution of 22.75%, while the smallest contribution is small-enterprises, namely an average of 16.20%. the fact of the role of MSMEs to GDP have implication for the government must be able to encourage the growth and development of MSMEs so that the contribution to GDP is greater.
Based on these data, the contribution of MSMEs to GDP cannot be underestimated. Even the role of MSMEs was seen when the economic crisis occurred in 1998. when companies went bankrupt because they were dependent on banks, MSMEs remained stable because they were not affected by the economic crisis, this was a positive impact of MSME independence in financial matters that did not depend on banking. However, some previous research also shows the role of MSMEs in GDP (Hamza, 2019;Riswara, 2018;Rohman, 2019). The role of MSMEs is very large for the Indonesian economy, although there is very little government attention (Muchlis, 2006). Hence, the government must provide support to MSMEs to be able to develop including quantity and quality.
Today, there are still many obstacles faced in developing MSMEs which are classic problems such as: First, financial problems. The impact is that MSME is difficult to develop a business because capital is one of the factors that greatly influence business continuity. Financial problems are exacerbated by limited financial access, because most MSMEs, especially the microenterprises sector, do not have good financial reports, even none at all, so access to banking finance is very difficult despite the existence of a mild interest credit program. Second, limited information. The lack of information possessed by MSMEs about national and international market conditions such as market demand trends is still very minimal, this is due to the lack of cooperation networks owned by MSMEs. Third, management skills. MSMEs do not have good management, from HR management, administration management, production management to marketing management, even though this is a basic skill for developing a company. Fourth, the use of technology is still very weak, both for production and distribution and marketing activities, even though the use of technology will create efficiency and effectiveness. Fifth, the quality of human resources is still not professional, namely, MSME workforce, especially micro-enterprises are private businesses that are usually handled by one person in all fields, meaning that there is no work specialization in accordance with their fields (Anam, 2019;Mersita, Fathoni, & Wulan, 2019; I. P. M. J. S. Putra, Endiana, Primadewi, & Rusjayanthi, 2019;Rifa'i, 2017).
As for the readiness of MSMEs in international competition, there is still much to be improved, especially in facing the free market competition of the ASEAN economic community. There are several problems faced by MSMEs: Export administration and bureaucracy are still complicated, funding for exports is still difficult, lack of information on international market needs, and there is no protection for MSMEs that are in dispute with foreign companies.
Meanwhile, MSMEs in Europe have developed very rapidly, even penetrating the international market. Developed countries such as America and Europe pay special attention to MSMEs to increase export activities by promoting promotion. The European Union has different policies for exporting activities by MSMEs: (1) Creating a simple business administration system.
(2) Improve the financial system that supports the MSME sector.
(3) Providing good information services to MSMEs by Europeanization and Internationalization.
(4) Increase the competitiveness of MSMEs and improve access and assist in development and training. (5) Providing entrepreneurship guidance (Fajar ND, 2016).
Experts and the results of previous research provide solutions in developing MSMEs including through financial training and bookkeeping to overcome the difficulties of banking access due to constrained financial reports, integrated assistance, developing MSMEs based on local wisdom, MSMEs with a creative economy, maximizing the potential of zakat for MSME development. MSME-based tourism in collaboration with local governments and tourism agencies (Ananda & Susilowati, 2017;Furqon, 2019;Hamang & Anwar, 2019;Sanistasya, Rahardjo, & Iqbal, 2019;Sari, Farida, & Hetika, 2019). Fajar ND and Setyobudi has given advice: (a) Soft interest bank loans for MSME development, (b) Conduct training for MSME counterparts in enhancing MSME credit capacity. this institution is called a bank partner financial consultant, (c) Establishment of a small and medium enterprise development center, to conduct training and accreditation of MSME assistant, (d) Development of an integrated small business development information system, (e) Establishment of an MSMEs center at commercial banks to serve MSMEs customers. (f) Ease of licensing. (g) Capital strengthening. (h) Market expansion and (i) Access to information (Fajar ND, 2016;Setyobudi, 2007).
Many previous studies used analysis to look for influence without displaying data or real conditions related to the role of MSMEs (Hamza, 2019;Rohman, 2019;T. Tambunan, 2006). They only looked at the level of significance without giving an in-depth explanation of the significance of the numbers such as numbers, percentages and other statistical data. The advantage of this paper when compared to previous research is to provide a detailed and clear picture of the role of MSMEs in absorbing labor and its contribution to GDP because it displays complete data by providing descriptive explanations and then supported by previous research to strengthen the statement in describing the data.
The contribution of this paper is to provide information to policymakers about the important role of MSMEs in absorbing labor to reduce unemployment and the contribution of MSMEs to economic growth as measured by GDP. Therefore the government must make policies that support the development of MSME in terms of quantity and quality. Especially in the free-market era of the ASEAN economic community which makes the competition tighter.

CONCLUSION
Based on the results and discussion above, it can be concluded that the role of MSME in absorbing labor and its contribution to Indonesia's GDP is very significant. During the 2012-2017 period, MSMEs were able to absorb an average workforce of 112,709,244 or 97.03%, microenterprises absorbed the most labor, namely 92%, then ranked the second small-enterprises by 5% and medium-enterprises by 3% of the total MSME workforce. During the period of 2012-2017, an increase in the number of MSME labor amounted to 14.70% or as many as 14,950,958 people, from that number micro-enterprises increased by 82,10% or 12.275.195 people, small-enterprises by 11,93% or as many as 1.784.329 people and medium-enterprises increased by 5,96% or as many as 891.434 people.
During the 2012-2017 period, MSMEs also contributed greatly to Indonesia