The Impact of Labor Strikes on Financial Performance of Mining Companies in Indonesia

Abstract

Abstract. The presence of labor strikes in the mining industry impact severely on the financial performance of the organization. This study is based on the historical information and accounting information taken from the financial statements of two mining companies in Indonesia. Pearson Correlation (significant level 0.01) is used to analyze the relationship between strike occurrences with operating profit (EBIT) generated by the organization. The results showed a strong correlation relationship between the impact of labor strikes on operating profit (EBIT) of the company. We therefore continued the analysis to study the negative impact on other financial indicators through comparative analysis of historical accounting financial information from two different mining companies operating in Indonesia. In a condition where one company has gone through labor strikes while the other has not. The company suffered from the strikes has slightly lower financial performance in terms of trend growth, short-term liquidity and long-term liquidity.

Keywords: Labor Strikes; Financial Performance Impact; Indonesian Mining Activities