The Jakarta Post
Twenty-one companies will relocate their factories from Karawang, West Java to other regions on account of next year's minimum wage increase, an official has said.
“According to our records, between 2017 and 2018, 21 companies relocated their factories because they could not afford to pay wages,” said Karawang Manpower and Transmigration Agency head Ahmad Suroto said on Tuesday as quoted by kompas.com.
The current minimum wage in Karawang is Rp 3.92 million (US$266.13. The official said the Karawang Payment Council had decided to increase the minimum wage by 8.03 percent, as recommended by the Manpower Ministry, to Rp 4.23 million in 2019.
Because of the relocation of 21 factories, 22,000 workers would lose their jobs, he said, adding that he had been informed that five garment companies also planned to relocate their factories in 2019.
The five garment companies currently employ about 9,000 workers, he added.
Suroto said he had tried to persuade the garment companies to stay, but they had argued that they could not afford to pay their workers.
He expected the wage increases next year to affect more companies, particularly companies that manufactured textiles, clothing and leather products, most of which were small and medium enterprises. (bbn)