Fewer workers employed to avoid rows, reduce risks<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The labor-intensive manufacturing sector is introducing major
\nchanges to the way it operates to avoid potential labor disputes
\nas a result of what the sector sees as unfavorable regulations.<\/p>\n
Many large manufacturers with over 1,000 workers are
\ndownsizing and reducing employee numbers, or subcontracting
\norders to smaller companies, to reduce labor costs and avoid
\nproduction disruptions caused by labor disputes.<\/p>\n
Many textile and garment manufacturers in West Java are
\ntransforming themselves into traders because their products are
\nno longer competitive in overseas markets due to illegal fees and
\noperational disruptions by workers.<\/p>\n
\"After 10 years of operation, I had to close down my textile
\nfirm last year due to problems with workers, who frequently went
\non strike while the company was dealing with financial problems,\"
\nsaid businessman Lili Asjudiredja on Tuesday.<\/p>\n
His company, which had 1,200 workers, found itself in
\nfinancial difficulty because of illegal fees and the inflow of
\ncheap smuggled textiles from China.<\/p>\n
\"If only the workers understood the company's situation and
\nwere not provoked by other parties, my company could still be
\noperational,\" said Lili, who is chairman of the West Java Textile
\nAssociation and a member of the House of Representatives.<\/p>\n
After paying some Rp 30 billion (US$3.18 million) in
\ncompensation to the dismissed workers, Lili opened a textile
\nspinning firm with several colleagues. The firm employs 400
\nworkers on annual contracts.<\/p>\n
Many businesspeople said their reluctance to employ huge
\nnumbers of workers was partly due to Law No. 13\/2003 on labor,
\nwhich stipulates that companies must provide numerous allowances
\nand a hefty severance pay for fired employees.<\/p>\n
For example, if a company was forced to lay off workers who
\nhad been with the company for nine years, it would have to give
\nthem severance pay of up to nine times the workers' monthly
\nsalary.<\/p>\n
This excludes the \"working-award allowance\", which can reach
\nmore than nine times the monthly salary for workers who have been
\nwith a company for at least 24 years.<\/p>\n
Businesspeople say it is difficult to dismiss unproductive
\nworkers because of the number of allowances they must provide
\nfired employees, with each allowance able to amount to more than
\none-month's salary.<\/p>\n
Due to these problems, Lili said, some of the giant textile
\nmanufacturers in West Java were choosing to reduce the number of
\ntheir workers and subcontract overseas orders to nearby home
\nindustries that have lower production costs.<\/p>\n
These small firms can produce textiles and garments at a lower
\ncost because they are not registered with any government agency,
\nso they do not have to comply with labor regulations.<\/p>\n
Workers in such companies are paid less than minimum regional
\nwages and receive no allowances or insurance. The workers are do
\nnot sign contracts, meaning they can be fired at any time.<\/p>\n
The chairwoman of the National Front for the Struggle of
\nIndonesian Workers, Dita Indah Sari, confirmed that employees at
\nthese small unregistered firms received few if any rights.<\/p>\n
Some companies, she said, preferred to tie up their workers
\nunder renewable annual contracts so they could more easily
\ndismiss the employees without having to pay much money.<\/p>\n
\"Our concern is that workers are not that demanding because
\ntheir bargaining position is becoming weaker. If they are fired
\nthey will have trouble getting a new job because a lot of
\nmanufacturing firms are shutting down,\" said Dita.<\/p>\n
According to Dita, some 175 manufacturing firms were closed in
\nWest Java alone over the past two years, putting some 750,000
\npeople out of work.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fewer-workers-employed-to-avoid-rows-reduce-risks-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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