RI bracing for mass layoffs

Mustaqim Adamrah ,  The Jakarta Post ,  Jakarta   |  Tue, 11/25/2008 7:07 AM  |  Headlines

Compounding a bleak financial situation that has experts forecasting Indonesia’s economy has nowhere to hide from the global financial crisis, the Manpower and Transmigration Ministry has said it expects 40,000 workers to be laid off.

Registered companies employing workers are required to report any plans to the ministry that could result in layoffs, especially of permanent employees.

Myra Maria Hanartani, a director general at the ministry, said the figure for planned layoffs would see roughly half of the number fired and the other half temporarily dismissed.

Temporarily dismissed workers will still receive their basic monthly salary and could be summoned back to work once the company’s condition improves.

“The workers the firms said they intended to dismiss so far number 40,486. Around half of them will be permanently dismissed,” Myra said.

She said only 2,000 of that number had already been layed off.

With the global financial crisis dragging the world’s economies into an recession estimated to be the worst in a decade, economists and business associations have said Indonesia’s economy will not be left untouched and that the inherited negative impacts could be long lasting.

While the government in its 2009 state budget forecasts the economy will grow next year by 6 percent, economists have put the figure far lower.

The Economist Intelligence Unit (EIU), a respected global think tank, forecast the country’s economy to grow 3.7 percent next year. UBS Securities has put the figure at 2.5 percent — which would be a nine-year low.

Separately, the Indonesian Rattan Furniture and Craft Producers Association (AMKRI), supported the gloomy outlook Monday when it announced the industry could have to lay off some 35,000 workers before the end of the year.

AMKRI chairman Hatta Sinatra said the industry was facing tough challenges due to a raw rattan shortage, in part caused by the implementation of a quotas system regulating rattan exports.

“(Because) of the raw rattan supply shortage, up to 144 rattan craft companies have so far been forced to cease their business operations since the implementation of the 2005 regulation,” he said after a meeting with Trade Ministry and Industry Ministry officials.

Secretary-general Abdul Sobur said the closures of the 144 enterprises, all in West Java’s town of Cirebon, had resulted in thousands of workers being laid off.

Rattan craft enterprises in Cirebon made up 90 percent of the total number of enterprises in the country, he said.

“With remaining rattan craft enterprises experiencing a 45 percent to 50 percent drop in revenues, more enterprises are expected to fold this year,” he said.

The 2005 regulation allows a maximum of 25,000 tons of raw rattan to be exported
per year, a maximum of 16,000 tons of semifinished rattan products to be exported from sega and irit plants per year, and a maximum of 36,000 tons of semifinished rattan products from other plants to be shipped overseas per year.

Indonesian Textile Association (API) deputy chairman and head of API’s West Java branch, Ade Sudrajat, said the country’s textile industry had temporarily laid off over 14,000 workers due to weakening demand for export.

“Almost 700 textile manufacturers have temporarily laid off a total of 14,000 workers as of today (Monday),” he told The Jakarta Post. (hwa)

Copyright © 2008 The Jakarta Post - PT Bina Media Tenggara. All Rights Reserved.