Do Financial Technology Firms Influence Labour Force Outcomes in Indonesian Banks?

In this paper, we examined the influence of technology growth on labour outcomes. Using a sample of 37 Indonesian banks and data on financial technology (FinTech) firms from 1998 to 2017, we discovered that technology growth negatively influences the number of employees and positively impacts employee compensation. The role of technology in these labour market outcomes are both statistically and economically meaningful. Economically, for instance, with an increase of 1 standard deviation in the number of FinTech establishments, the number of Indonesian bank employees decreases by up to 2.30% of mean employees (equivalent to 58 employees) and employee compensation improves by up to 17.83% of mean compensation (equivalent to US$1,830). Furthermore, we showed that bank characteristics affect technology growth–labour outcomes relation. The effect of technology growth on labour outcomes is stronger for banks that have a bigger market value, are more mature, and are private.