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Expect big layoffs in 2009, say industries
Industry players say a collapse in many sectors next year is not likely, but warn a drop in revenue is very real, with some industries to be hit harder than others as the impact of the global downturn peaks at home
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Industry players say a collapse in many sectors next year is not likely, but warn a drop in revenue is very real, with some industries to be hit harder than others as the impact of the global downturn peaks at home.
On Friday, associations representing the footwear, textile and garment, food and beverage, and construction industries gathered to discuss the economic climate, and concluded layoffs next year could see more than a million workers lose their jobs if the government did not take urgent action.
The crisis is already taking its toll on local industries heading into the end of this year, forcing numerous industries to cut production, and will worsen next year as revenue is expected to drop by an average 30 percent.
Benny Soetrisno, chairman of the Indonesian Textile Association (API), said textile makers could be hit by a revenue drop of as much as 50 percent.
“We expect to see layoffs of 70,000 to 80,000 workers in the textiles and garments industry next year,” he said, adding the industry had already dismissed 30,000 workers in the past two months alone.
The global financial crisis has tipped into a recession, significantly reducing demand for products and casting a bad spell for developing countries such as Indonesia.
Indonesia’s economy is now predicted to grow by around 4 percent next year, slower than an estimated 6 percent this year. Under the 2009 state budget, the government assumes economic growth of 6 percent next year.
In addition to a weakening demand for exports, investments are also likely to take a hit as the ongoing credit crunch derails flows of funds.
With investments and exports drying up, domestic consumption would again be the country’s main economic driver, although that too could be affected by weakening purchasing power if consumers lose their jobs, the gathering was told.
Sofjan Wanandi, chairman of Indonesian Employers Association (Apindo), said the government could prevent massive layoffs in labor-intensive industries such as construction by speeding up infrastructure development plans.
“Government spending will be the key for the economy next year. The government must accelerate infrastructure projects, otherwise we’ll see millions of workers laid off,” Sofjan said.
On the bright side, however, the automotive and retail industries could perform a little better than others, with only slight drops in revenue expected and layoffs unlikely.
Gunadi Sindhuwinata, president director of PT Indomobil Sukses International, said the automotive industry would likely be safe from the threat of dismissals, but was already being forced to cut production capacity by an average 30 percent.
Retailers, meanwhile, are looking to rely on discounts to help maintain sales targets next year, said Indonesian Retailers Association (Aprindo) adviser Suryadi Sasmita.
“Revenue will unlikely drop, but we’ll be giving more discounts than in 2008,” he said.
