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Tariff hike may trigger huge layoffs study shows
The government’s decision to increase the electricity tariffs may result in the layoff of more than a million workers, a study says
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The government’s decision to increase the electricity tariffs may result in the layoff of more than a million workers, a study says.
The proposal, which mandates an average 10 percent power tariff increase, will lower industry’s need for workers by 1.17 percent. More than one million workers could be affected, according to a study conducted by energy research organization ReforMiner Institute.
“Industry’s demand for workers could decrease because they have to operate less machines to cope with the tariff increase. This will result in layoffs,” ReforMiner Institute chairman Pri Agung Rakhmanto said in a press conference Tuesday.
The government and the House of Representatives agreed to raise power tariffs by an average of 10 percent starting July 1. The increase will offset an estimated Rp 4.87 trillion-(US$535 million) electricity-spending deficit in the state budget.
Tariffs for households with an installed power capacity between 450 and 900 volt-amperes (VA) will not be increased.
Tariffs for commercial buildings — such as private company offices, malls, and hotels — with an installed power capacity greater than 200 kilo volt-amperes (kVA) will increase 12 percent.
The tariff increase will be 6 percent for manufacturing customers who use between 1,300 and 2,200 VA; 9 percent for customers who use between 2,200 VA to 200 kVA and 15 percent for customers who use more than 200 kVA.
The research also studied the effect of the power tariff hike on 10 power-intensive industries, such as textiles, shoe manufacturers and trains.
“Based on our study on the 10 sectors, the power tariff increase will increase production costs by 2.13 percent,” ReforMiner Institute deputy chairman Komaidi said.
He said cost production increases will further raise inflation because manufacturers will pass the increase to consumers.
The revised 2010 state budget estimates the inflation rate will be 5.3 percent, but the new power tariff will increase inflation to a figure between 5.93 percent and 5.98 percent, Komaidi said.
The Communication Forum of National Associations (ForKan) said last week that industries would not be affected by the planned tariff increase if the government keeps its promise to eliminate additional charges in electricity services such as extra fees imposed during peak hours, when industries are required to pay 1.5 times the usual rate.
