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Jakarta Post

More labor protests may hit industrial sector next year

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Wed, November 13, 2013   /  09:20 am
More labor protests may hit industrial sector next year Labor intensive: Employees work at a garment factory in Bintan Island, Riau Islands. (JP/Arief Suhardiman) (JP/Arief Suhardiman)

Labor intensive: Employees work at a garment factory in Bintan Island, Riau Islands. (JP/Arief Suhardiman)

Labor intensive industries are predicting a gloomier business outlook next year, with an increase in minimum wages and growing labor rallies hurting business.

The Indonesian Textile Association (API) predicts an escalation in labor protests in 2014 as political parties use the labor issue to attract support from voters in the general and presidential elections.

API chairman Ade Sudrajat feared certain parties may force workers to join political rallies during the elections, further hurting businesses that had already been severely affected by the rise in the minimum wage.

Indonesians will hold elections in April and July, next year, to choose their representatives in the legislative and the new president.

According to him, overseas demand for the country'€™s textile related products would remain strong, especially in the US and Japan, but textile producers would not be able to benefit from the momentum, as the escalation of labor rallies could disrupt their production activities.

With such unfavorable conditions, he estimated the textile industry would grow between 3 and 4 percent next year, despite stable demand from overseas buyers.

The API estimates textile exports will increase to US$13 billion this year from about $12.65 billion in 2012, less than 3 percent compared to $12.6 billion last year.

The government recently increased the minimum wage by between 10 and 15 percent in major industrial centers such as Jakarta, Banten, West Java, Central Java and East Java, but workers opposed the wage increase, saying the rise was not enough to cover their basic needs. They vowed to further carry out street protests until the government fulfilled their demand to raise the wage by up to 50 percent, which is regarded as unrealistic.

Footwear Manufacturers Association (Aprisindo) chairman Eddy Widjanarko predicted stagnant growth for the footwear industry in 2014 due to difficulties in settling minimum wage issues with workers.

The association estimated that overseas demand would begin to increase next year thanks to recovery in the world economy. But local shoe producers would not be able to take advantage of the rising demand due to growing labor protests next year.

Eddy estimated the footwear industry would grow by about 11 percent next year from about 10 percent this year, with the figure reflecting stagnant growth.

During the January to August period this year, footwear exports rose by 11 percent to $3.9 billion from $3.5 billion in the same period last year.

Toy Manufacturers Association vice chairman for marketing Sudarman Wijaya echoed Eddy'€™s sentiments, predicting the toy industry would see stagnant growth in 2014.

He said the toy exports would only grow by 7 percent next year, the same level as growth estimated for 2013.

'€œI'€™m pessimistic our growth will be higher next year. Some protesters have disrupted productivity by conducting sweeps and factory lock-outs to force workers to join their rallies,'€ he told The Jakarta Post in a telephone interview on Friday.

Association of Indonesian Furniture and Handicraft Exporters chairman Ambar Tjahjono predicted the furniture industry would face a growth decline in 2014.

He predicted furniture exports would decline to around 2 or 3 percent in 2014 due to decreased output caused by workers'€™ rallies. He said workers'€™ rallies would seriously disrupt production activities. This year, the furniture industry expects 7 percent growth, with exports rising only to $2 billion from $1.8 billion in 2012.

'€œIf the workers stage protests for three days, we won'€™t be able to produce anything for three days. We can'€™t just hire some workers to replace the ones who are rallying. It takes specific skills to produce furniture or textile products,'€ he said.

He believed most workers preferred working to rallying. He said, however, that members of labor unions often went to factories to force workers to join the rallies.

He added the protesters were often intimidating when they swept through the factories.

'€œThey break factories'€™ gates down, blocking people'€™s way to the factory and intimidate couriers carrying raw materials to the factory. Some couriers even cancel their plan to carry raw materials to the factory because the protesters threaten to burn the material,'€ he said.

He said overall productivity and efficiency had declined as a result of the protests.

'€œThe protests have also caused a delay in delivering our products to importing countries. How can we deliver the products on time when we can'€™t get to Tanjung Priok Port in North Jakarta because our way out of the factories has been blocked by rallying workers?'€ he said. (ogi)

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