Workforce Mental Health Dynamics in the Formal Sector: A Correlative Study of Regional Minimum Wage (UMR) and the Happiness Index on National Productivity

Abstract

This study addresses the critical misalignment between professional performance demands and the psychological stability of Indonesia’s formal workforce amid stagnant regional wage growth. It examines the correlative impact of the Regional Minimum Wage (UMR) and the National Happiness Index on labor productivity, proposing mental well-being as a key economic mediator. Using a quantitative correlational design, the research analyzes secondary time-series data from 34 provinces, covering approximately 135 million formal workers during 2021–2024. Purposive sampling was employed to obtain official indicators from the Central Bureau of Statistics (BPS) and the Ministry of Manpower, which were processed using multiple linear regression. The findings reveal a strong positive correlation (r=0.812; p<0.001), with 48% of productivity variance explained by wage levels and subjective well-being. The UMR functions as a foundational “mental security” net, while life satisfaction within the happiness index acts as a primary performance driver. These results suggest wage policies should incorporate “Psychological Living Costs” to avoid low-productivity traps. National economic resilience depends on aligning fiscal compensation with mental health support. Future studies should apply longitudinal primary data to capture real-time psychological dynamics.