Jakarta – More than 40,000 workers in Jakarta have lost their jobs so far this year, according to the Jakarta chapter of the Indonesian Employers Association (Apindo).
The worse has yet to come however, as a city official predicted another wave of layoffs would peak in May and June. "In that period a lot of order contracts end," Deded Sukandar, head of the city's manpower agency said Wednesday.
Data from Apindo Jakarta shows that, as of Feb. 28, more than 40,000 people became jobless in 2009, with the construction sector shedding 15,000 jobs, the automotive sector 10,000 and the electronics sector 5,000. The remaining layoffs were in the textile and retail industries.
Meanwhile, nationwide, the Association recorded that around 240,000 workers have lost their jobs so far this year.
"Layoffs in the automotive and electronics sector are quite high because of a high increase in the minimum wage in different sectors regionally," Chairman of the Jakarta Chapter of the Indonesian Employers Association (Apindo) Soeprayitno said, as quoted by vivanews.com
The city administration has raised the 2009 provincial minimum wage (UMSP), giving workers in the capital slightly higher pay than those in the surrounding province, despite protests from companies suffering from the global economic crisis.
Under a gubernatorial regulation, the city administration raised workers wages from 2.5 percent to 11.5 percent higher than the province's minimum wage, depending on the sector the workers are employed in. This year's minimum wage in the province is Rp 1,069,865 (US$85).
Deded said Wednesday that Governor Fauzi Bowo signed the new regulation in early February. The regulation is retroactive and took effect on Jan. 1, 2009.
Deded claimed that no company objected to the increase after the policy was enacted. Companies had 14 days to object the decision.
He added that workers in the automotive sector have the highest minimum wages compared to other sectors, 11.5 percent higher than Jakarta's minimum wage.
Deded said that companies that failed to pay workers in line with the new regulation can be fined up to Rp 500 million as regulated under the 2003 labor law. "We have informed companies and they know this," he said.
The Jakarta chapter of Apindo warned earlier that massive layoffs would be inevitable should the administration insist on its plan to raise the provincial minimum wage (UMSP) for different sectors, saying that if it does decided to impose the plan, employers, especially in the automotive and electronics sectors, would be hard hit by the policy. The economic crisis has already forced four automotive companies to cut their production from three working shifts to two.
Deded, however, brushed off the automotive industry's concern saying "the automotive sector is a big scale industry with good management".
The association said that their figure was higher than the government's because some companies did not report the layoffs. According to Soeprayitna, only around 15,000 businesses report layoffs reported to the government. There are around 28,000 businesses in Jakarta.
The agency reported that around 530,000 workers became unemployed in 2007. Last year, the number rose to 560,000 workers. Deded said that 2009 would likely to see more layoffs, because of the ongoing economic crisis.