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Massive layoffs shake small businesses
It is estimated that around 80,000 workers had been laid off as of September this year, according to Manpower Ministry data, as many businesses in the real sector have felt the pinch of the domestic economic slowdown, which saw growth weakening to a six-year low
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em>It is estimated that around 80,000 workers had been laid off as of September this year, according to Manpower Ministry data, as many businesses in the real sector have felt the pinch of the domestic economic slowdown, which saw growth weakening to a six-year low. The Jakarta Post's Khoirul Amin explores the issue in a field report at Karawang and Bekasi in West Java, which is home to many electronics, automotive and textile factories.
It was lunch time; just a regular weekday in November on a street built up by thriving shoulder-to-shoulder food stalls. But on this day, in the hight of the midday heat, these once-crowded food stalls are deathly quiet, the few motorbikes and pedestrians now passing them by.
The street, situated near the 54-hectare Gobel industrial estate in Cibitung, Bekasi regency, used to be busy with crowds of workers from the nearby factories flocking to the stalls to buy meals and snacks.
'The situation here began to change in February Since then things have become increasingly quiet, as you can see today. This might be because many workers have been laidoff or haven't had their contracts extended,' said Wasmen, who runs a food stall on the street side.
Wasmen recently informed The Jakarta Post that she now earned less than Rp 20 million (US$1,419) per month, a significant drop from the Rp 30 million or more that she had earned before the layoffs faced by many workers at the Gobel industrial estate. She no longer employs outsiders, her daughters now help serve customers as the extra money, once income for a paid employee, is needed to cover the growing rental fees for her 2-by-3 meter stall.
Similar trends of declining sales and less traction can be seen among the many other food stalls, boarding houses and laundry businesses located close to the industrial areas of the MM2100 in West Cikarang, Bekasi and Karawang International Industrial City (KIIC), where a number of automotive, electronics and textile factories are based.
According to data from the Manpower Ministry, 79,425 workers had been laid-off as of September this year, with Bekasi regency accounting for 2,197 and Karawang for 283.
The garment, electronics and footwear industries contributed most significantly to the reported job loss, with worker lay-offs reading 36,000 people, 15,000 people and 10,000 people, respectively.
Soni, who owns a food stall in West Karawang, near the KIIC area, said that his gross revenues declined to less than Rp 900,000 a day in recent months, from between Rp 1.8 million and Rp 2 million a day.
'I don't know where my customers have gone, but many of my regular customers, their familiar faces are not seen anymore. They've probably been laid-off and returned to their hometown or found jobs elsewhere,' he said, adding that many of his customers worked on a contract basis with global brands like Yamaha, Honda and Daihatsu.
Soni, who also manages a boarding house, went on to voice further concern, mentioning that there had been no recent enquiries made with regard to his vacant rooms; prior to this year's layoffs he had fielded dozens each day. In fact, he added, five rooms had remained unoccupied for the last two months.
Located just 100 meters from Soni's stall, Siti's laundry shop is also experiencing a drop in sales. The 3-by-4 meter store currently receives 50 to 80 kilograms of laundry per day; it used to process around 100 kg per day.
'There had been considerable demand for laundry service from contract workers living nearby. From the Daihatsu factory, for example, there were usually five to six people delivering their laundry a day but now only two remain. Maybe some of the workers have lost their jobs,' she said.
Lower consumer purchasing power due to the economic slowdown has resulted in lower demand in many industrial sectors, in turn leading to declining capacity utilization and use of labor.
According to Jongkie Sugiharto, co-chairman of the Association of Indonesian Automotive Manufacturers (Gaikindo), national car sales had reached around 800,000 units as of October this year, a 23 percent drop from 1.04 million units during the same period last year.
The association has estimated that total car sales will hit between 950,000 units and 1 million units by year-end, the lowest sales figure over the last three years.
Jongkie explained that a number of automakers had been undergoing efficiency measures such as annulling shift work and reducing overtime to adjust to lower demand from consumers.
'Car production this year will likely hit around 1.2 million units for both domestic and export markets, from a total production capacity of 1.9 million units a year,' he said.
A recent survey by Bank Indonesia (BI) has revealed that capacity utilization across business sectors declined to 75.36 percent in the third quarter of this year, from 77.82 percent in the previous quarter, with the manufacturing sector recording a sharp plunge to 68.46 percent.
Net weighted balance for the use of labor in the first nine months of this year contracted by 1.75 percent and a contraction of 0.72 percent is expected to happen in the last quarter of this year, the survey has unveiled.
Data from the Central Statistics Agency (BPS) has confirmed that the open unemployment rate in August increased by 6.18 percent compared with that in February of 5.81 percent. The country's working population has slumped by 5.9 million people to 116.5 people as of August, from 122.4 million people in February.
Sutinah, who has a food stall near Bekasi's MM2100 area, said that she was worried that her business would continue to decline throughout this year. She attributed a 55 percent sales drop in her business to the layoffs that face workers living nearby, in addition to competition from new emerging food stalls.
Institute for Development of Economics and Finance (Indef) executive director Enny Sri Hartati said that the current situations faced by industries might not see any sign of improvement in the fourth quarter, as consumer purchasing power was expected to remain low or stagnant.
Various workers' alliances in Bekasi and Karawang, such as the Indonesian Metal Workers Union (SPMI) and the United National Workers (SPN), meanwhile, stated that they had not got any massive layoff reports from their members.
In Bekasi, most layoffs in the garment and textile industry happened a few years back, when many of the garment and textile companies' opperating in the regency went bankrupt, said SPN Bekasi chairman Joko Sugimin.
Indonesian Textile Association (API) chairman Ade Sudrajat said previously that the textile industry had pinned their hopes on the government's economic policy packages and special textile-help desk to boost the industry's growth and avoid more layoffs.
