Wawan Kurniawan, Jakarta – About 1,800 workers at Victory Chingluh Indonesia, a shoe manufacturer in Tangerang, Banten, have been laid off following a wave of export product returns due to quality issues. The mass termination adds pressure to Indonesia's labor-intensive manufacturing sector, which is struggling to balance rising costs and global competition.
Unang Sunarno, chair of the Indonesian Labor Union Congress Confederation (KASBI), said the layoffs were triggered by declining product quality rather than wage disputes. "The main reason for the layoffs was the return of exported goods, not wage issues," Unang said on Friday.
According to Unang, companies producing branded footwear generally have the financial capacity to comply with Tangerang's regional wage standards. However, some business groups continue to attribute layoffs to high labor costs. "Major brands can afford to follow wage rules. It's often Apindo [the employers' association] that links layoffs to high wages," he said.
Out of roughly 3,000 workers initially listed for downsizing, 1,800 have officially lost their jobs. KASBI criticized the decision, saying the layoffs could have been avoided through earlier quality control and management improvements.
"We oppose unilateral layoffs because not all employees are prepared or have agreed to the termination terms," Unang said, adding that further layoffs remain possible depending on the company's evaluation of production defects.
The company, part of Taiwan's Ching Luh Group, operates footwear manufacturing plants in China, Vietnam, and Indonesia. In March, the local manpower department said the company has cut about 2,000 jobs since January.
Apindo Tangerang chairman Herry Rumawatine urged local authorities to prevent the factory's full relocation to Pekalongan, Central Java, which would deepen job losses in Banten. PT Victory Chingluh produces footwear for Nike and is among the region's largest employers.
"Apindo has coordinated with local governments to find a solution so the plant doesn't completely move out," Herry said. He argued that high minimum wages, unclear additional fees, and social pressure to recruit local workers without proper qualifications have increased operational burdens.
"These factors make companies consider relocating to regions with lower production costs," he said.
Apindo has called on regional leaders to improve the business climate to retain manufacturers. "We hope the factory keeps part of its operations in Tangerang. Expanding elsewhere is fine, but don't close this one," Herry said.
He added that Apindo plans to enhance workforce training programs for unemployed residents to improve their qualifications and match industry needs. "The problem isn't a lack of workers – it's a lack of skilled ones," he said.
Meanwhile, Adis Dimension Footwear, which has been Nike's exclusive partner for more than three decades, eliminated 1,500 jobs last year as part of cost-cutting efforts. Adis Dimension operates on a 25-hectare site in Balaraja District, Tangerang.
Source: https://jakartaglobe.id/business/nike-supplier-lays-off-1800-workers-in-indonesi