Abstract This study examines the effects of investment, provincial minimum wage, population growth, ICT index, and manufacturing GRDP growth on formal employment absorption, and its implications for the Human Development Index (HDI) in Indonesia. Using balanced panel data from 14 provinces selected as Indonesia’s principal industrial and investment hubs with complete data coverage, over 2015–2024, estimated with Panel EGLS Random Effects and GLS Period SUR weighting, the results show that all independent variables jointly significantly affect formal employment absorption (F=196.58; p=0.0000). Investment, ICT index, and manufacturing growth have positive significant effects, highlighting structural transformation and digitalization. Minimum wage and population growth are also positive, while the COVID-19 pandemic in 2020 has a significant negative impact. In the second stage, formal employment absorption has a positive but insignificant effect on HDI after controlling for average years of schooling, poverty rate, and regional education-health expenditure. The pandemic in 2020–2021 significantly suppressed HDI. These findings suggest that formal employment is important but not yet sufficient to boost HDI due to job quality, productivity, and redistributive policy constraints. Integrated policies linking labor markets, industrialization, and digitalization are essential for resilient and sustainable human development.
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