The Indonesian Textile Association (API) has forecast around 120,000 temporary layoffs next year due to a slowdown in the economy of the United States -- the world's largest economy and main buyer of Indonesia's textile products.
API deputy chairman Ade Sudrajat Usman said Wednesday a projected decline in textile exports might eventually force implementation of layoffs.
He said textile and apparel exports to the United States -which absorbed 33 percent of Indonesia's total textile exports, dropped to US$2.12 billion during the first half of this year compared to $5.1 billion booked in the same period last year.
"We are estimating that 10 percent of the textile industry's workers, or around 120,000 people, will probably be temporarily laid off by January next year if things keep getting worse," he said.
He said the Indonesian textile and apparel industries consisted of 1,090 companies and absorbed a total of 1.2 million workers.
The discharged workers, however, will still receive their proper salaries as stipulated in the labor law and should get their jobs back once their companies return to normal capacity.
However, if the problem became still worse, then workers could be permanently discharged, according to Ade.
However, API secretary general Ernovian Ismy said manufacturers were trying to prevent dismissals resulting from the decline in textile and apparel exports to the United States.
"Lower exports may force us to reduce our production capacity but we can balance that by shifting employees' working hours," he said.
"Even if the (affected) companies are sold, there is no guarantee that they will have enough money to cover the costs (of dismissing their workers)," he said.
Ernovian said the government needed to respond quickly to the possibility of declining demand from importing countries.
"If an influx of textile and garment imports keeps coming in, local producers have to immediately find new markets to prevent layoffs," he said.
According to Ade, a textile manufacturer, along with some electronic and footwear manufacturers, have already shut down their operations due to cuts in orders in the wake of the global economic slowdown.
"There are two or three companies already laying off 2,000 workers altogether," he said.
Meanwhile, director for planning of manufacturing industries for the Investment Coordination Agency (BKPM), Hari Baktio, said that investment-wise, the textile industry had still attracted an additional 25 new investors this year. (iwp)
