Jakarta – The Indonesian Employers Association (Apindo) said that massive layoffs are in sight should the city administration insist on its plan to raise the sectoral provincial minimum wages (UMSP) by between 5 percent and 12 percent, an executive said Friday.

"Should the administration impose the plan, employers, especially in automotive and electronic sectors, would be hard hit by the policy. That's simply unbearable for our businesses, now feeling the pinch of the global economic downturn," Soeprayitno, Apindo's Jakarta chapter chairman, told reporters. "Massive layoffs will be inevitable," he warned.

The administration has planned to raise the provincial minimum wage to Rp 1,069,865 (US$106) this year from Rp 972,604 in 2008.

According to Soeprayitno, the economic crisis has forced four automotive companies in the city to slash their production from three working shifts to two. Some companies have also terminated their contracts with around 4,000 workers.

"It is normal if they 'the employers' file an objection to the plan. We should work this out together. In the electronics sector, we see a significant slump in demand due to the shrinking purchasing power of the people and the declining Indonesian rupiah," he said.

The planned raise would also deal a blow to the hotel industry. "Some hoteliers reported occupancy rates in decline as many companies cut their budgets for conferences at hotels," he said.

He suggested the administration allow Apindo to sit at the negotiation table with representatives of the labor unions to seek a solution.

Jakarta Governor Fauzi Bowo said that the city administration would discuss the proposal before giving its final decision.

"I need to have all the input before making a decision. I have invited them to discuss it," Fauzi said. "It is normal if they 'the employers' file an objection to the plan. We should work this out together," Fauzi said.