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Jakarta Post

900,000 workers to lose jobs

  • Nurfika Osman

    The Jakarta Post

Jakarta   /   Thu, February 14 2013   /  10:22 am

Industry Minister MS Hidayat warned on Wednesday of massive layoffs in April if relevant authorities failed to postpone the recent rise in the minimum regional wage for labor-intensive industries.

Around 900,000 workers employed by at least 1,320 companies in the food and beverage, tobacco, textile, footwear and leather, toy and furniture sectors were set to lose their jobs, according to Hidayat.

“Businesses cannot bear the costs incurred by the new minimum wage, which has increased by an average of 43 percent,” said Hidayat.

He added that companies faced difficulties, however, in cutting the number of workers to compensate for the wage rise as severance costs for dismissed workers were extremely expensive.

Regional administrations agreed to increase the 2013 minimum wage late last year by between 30 and 40 percent, mostly due to pressure from striking...