An Analysis of Strategies for Increasing Economic Growth as an Effort to Reduce Poverty and Unemployment through Regional Financial Management optimization

Abstrak

During the Covid-19 pandemic, the percentage of poor people in Central Java increased from 10.58% in 2019 to 11.41% in 2020, and in 2021 it again increased to 11.79%. It happened due to the large number of companies that have terminated employment (PHK) for several employees because of the dramatic company's production drop. Regarding this matter, the open unemployment rate in Central Java experienced a very significant increase, namely from 4.44% in 2019 to 6.48% in 2020. The specific purpose of this research was to analyze possible strategies for increasing economic growth as a means of reducing poverty and unemployment through the optimization of regional financial management. It used an SEM PLS analysis method. Findings showed that: 1) balancing funds was the variable that had a direct and significant effect on economic growth, 2) balancing funds and economic growth had a direct and significant effect on the unemployment, 3) the variables which had a direct and significant relationship on poverty were capital expenditure and economic growth, 4) fiscal decentralization and balancing funds had no significant effect on poverty, 5) capital expenditure had an indirect effect on unemployment through economic growth, 6) the variable that indirectly had a significant influence on poverty through economic growth is also capital expenditure, 7) capital expenditure indirectly had a significant effect on poverty through economic growth, 8) fiscal decentralization and balancing funds had no significant effect on unemployment and poverty through economic growth. Thus, Central Java province used to be a province with unemployment and poverty issues. For the strategies, it is suggested for the government to simplify the registration process of license and tax breaks for labor-intensive industries so that they can absorb a greater workforce.