industries; (6) Industries of non-metallic minerals
except oil and coal; (7) Base metal industry; (8)
Manufacture of metal goods, machinery and
equipment; (9) Other processing industries. (BPS
North Sumatra, 2017). Of the 9 industrial groups, the
growth of the number of industries each year from
2013-2016 fluctuated, the highest growth was
achieved by the food, beverage and tobacco
industries. The role of growth in the 9 industrial
groups will have an impact on the number of
workers used.
Absorption of labor in 9 industrial groups each
year fluctuates. The highest absorption of labor is in
the food, beverage and tobacco industry sectors
where the number of workers employed in 2016 is
89,782 people. While the lowest was in other
processing industries, which amounted to 2,655
people. So that it can be concluded that the role of
the food, beverage and tobacco industry sector is
able to spur regional economic growth and the
development of the industrial sector in North
Sumatra Province. The growth and development of
the industrial sector promises to broaden
employment opportunities. On the other hand, the
government wants to optimize the role of the food,
beverage and tobacco industries in North Sumatra
province in contributing to the demand for labor so
that there needs to be an in-depth study of the factors
that affect labor demand in the food, beverage and
tobacco industries.
According to Simanjuntak (1985) and Hani
Handoko (1985), Demand for labor in the small
industrial sector is influenced by internal and
external factors of each of its business units.
Internally influenced by output values, wage rates,
labor productivity, capital (technology), and other
non-wage expenditures. While externally is
influenced by the level of economic growth,
inflation, unemployment and interest rates. Based on
the research of Afrida (2003) that the high and low
absorption of labor by the economic sector depends
on several factors such as output value, wage level,
education level (labor quality), working capital and
the number of industries. In line with the results of
the study of Esti R (2003) that the factors that
influence labor demand are industrial output,
working capital (investment), wage level and the
number of industries used by the sector. Based on
the results of previous research the author tried to
examine the factors that influence labor demand,
namely: industrial investment, number of industries,
wage level and GRDP.
2 THEORICAL FRAMEWORK
2.1 Effects of Investment Industrial Sector on
Labor Demand
In Keynes's macro theory, to decide whether an
investment will be carried out or not depends on the
comparison between the amount of expected profit
(expressed in percentage per unit time) on the one
hand and the cost of using funds / interest rates on
the other. This expected level of profit is called the
Marginal Efficiency of Capital / MEC (Boediono,
1986). In summary this concept can be described, if
the expected profit (MEC) is greater than the interest
rate, then the investment is carried out. If the MEC
is smaller than the interest rate, then the investment
should not be carried out and if the MEC = the
interest rate, then the investment may be carried out
and may not be in accordance with the decision of
the owner of the capital.
From the description above it is known that the
level of investment desired by investors is
determined by two things, namely the interest rate
that applies the MEC or investment function. This
MEC function / investment function shows the
relationship between the prevailing interest rate and
the level of investment expenditure desired by
investors.
Through the investment function curve there are
three things that need to be underlined about this
investment function, that is, first, the function has a
negative slope which means that the lower the
interest rate, the greater the investment expenditure
desired or planned by investors.
Second, in reality this investment function is
difficult to obtain because its position is very labile
and easily changed in a short period of time. The
volatility of the investment function can be
understood, because its position is very dependent
on the MEC values of the existing projects and that
the MEC is the profit expected by investors. Because
it is based on future expectations / expectations (if
on the basis of subjective calculations) where the
MEC of a project may change from day to day and
sensitive to changes in the socio-economic
conditions of a country. The existence of political
turmoil in an area, rumors of a devaluation, the issue
of foreign exchange control, and restrictions on
imports for example will directly be able to change
the subjective judgment of investors in a project. So
many factors influence the MEC, so the position of
investment functions will be very easy to change.
The volatility of the investment function is a
theoretical and Keynesian explanation of the fact
that in reality investment expenditure (I) shows