Yuli Tri Suwarni, Bandung – At least 15,000 employees of West Java's export-oriented companies have been laid off, with the decline in productivity caused by the current global economic crisis, a business association says.
Some 40 companies, mainly involved in the production of electronic goods and garments in Bandung and surrounding areas, laid off workers as they began to face financial burdens, said Dedi Wijaya, chairman of the Indonesian Employers' Association (APINDO) West Java chapter.
"Those who process imported raw materials are facing difficulties to keep production costs down. So, it's better for them to lay off workers than dismiss them while waiting for the situation to recover," Dedi said on Tuesday.
Aside from increasing production costs that have climbed 25 percent since the depreciation of the rupiah against the US dollar, declining overseas demand has impacted conditions for business, Dedi said.
According to the association's data, Dedi said, the decline in business could lead to the dismissal of up to 100,000 workers in the province. Dedi said, as well as laying off workers, many businesses had reduced their working hours and stopped overtime to reduce costs.
In anticipating the decline, West Java Governor Ahmad Heryawan said his administration had begun to identify companies that were suffering and clustered them into groups. "This will help us isolate problems and seek solutions for them," Heryawan told reporters on Tuesday.
In a meeting on the manpower issue on Monday, Heryawan urged workers to understand the tough times and to cooperative in demanding minimum wages.
He hinted at a possible increase of 20 percent to the provincial minimum wage, due to increases in the cost of living (KHL) which are calculated based on the prices of basic needs. However, Heryawan said, "we must first conduct a survey on KHL before we decide to increase minimum wages".
The current minimum wage in West Java is set at Rp 568,193 (US$47) per month, nine percent higher than last year's rate.
West Java's Manpower and Transmigration Agency head Mustofa Djamaludin confirmed that the current global financial crisis could trigger dismissals of up to 100,000 workers in the garment and plantation industries. "None of the companies have proposed dismissals yet, but some have laid off employees," Mustofa said.
According to the manpower office data, there are 24,000 small and medium enterprises in the province, employing some 2.8 million workers.