THE PRODUCTION ACTIVITIES OF THE PERSONAL CARE INDUSTRY : MINIMUM WAGES AND INTEREST RATE

The personal care industry's growth in the last few years was affected by the COVID-19 pandemic and has stagnated at IDR 21 trillion a year. The industry even experienced a decline in 2023 with its growth dropping to IDR 20.80 trillion. Therefore, there is a need to examine minimum wage and credit interest as the factors that might contribute to this phenomenon. This study examines the effect of District-level minimum wage (UMK) and credit interest on the personal care industry growth in Indonesia from 2010 to 2023. Linear regression analysis was adopted to analyze time series data on a total of 14 observed units that will improve previous studies and offer high originality. The analysis found that the changes in UMK affect personal care productions in Indonesia by 89% and the changes in credit interest affect personal care production negatively by 78.10 %. Simultaneously, UMK and credit interest significantly affect personal care industry growth in Indonesia with 89.10% simultaneous effects. The partial and simultaneous conclusion of this study shows a significant effect of UMK and credit interest on personal care production in Indonesia. This conclusion proves that it is crucial to observe both variables, particularly regarding the minimum wage regulation in the large urban area (Jabodetabek) to prevent an exodus from this region due to expensive labor costs.