50,000 workers in footwear industry facing dismissal

50,000 workers in footwear industry facing dismissal

JAKARTA (JP): Some 50,000 of the around 500,000 workers
employed in 90 footwear factories could face dismissal due to the
government's prolonged ban on the import of leather raw materials
from South Korea and Japan, a footwear industry executive warned.

Djimanto, secretary general of the Association of Indonesian
Footwear Manufacturers (Aprisindo), said that as a result of the
ban footwear factories have had to reduce production capacity in
the last month which, if the trend continued, would likely
precipitate the layoff of about 10 percent of all the workers
employed in the industry

"A massive dismissal of labor may be unavoidable in the next
three months. Several factories operating in Tangerang and Bogor
have already dismissed a small number of their workers," he told
The Jakarta Post by telephone here on Monday.

He said that national footwear production had slowed since the
Directorate General for Livestock Production of the Ministry of
Agriculture issued a decree on April 19, banning the import of
leather raw materials from Japan and South Korea as it was
believed that they could transmit foot-and-mouth disease here.

Djimanto contended that the ban was unjustified as Japan and
South Korea processed their leather products in accordance with
international standards before being exported to Indonesia and
other countries such as China and Thailand.

He also pointed out that foot-and-mouth disease had not broken
out in either China or Thailand.

Djimanto estimated that around US$500 million in foreign
exchange would be lost as a result of a drop in exports due to
the lower production.

"The government is targeting revenue of $2 billion from this
sector and up to August, 60 percent of this target had been
reached," he said.

According to Djimanto, the industry has so far found itself
unable to meet orders amounting to 6.39 million pairs of footwear
products worth $83 million.

Djimanto asserted that the government should not blame the
footwear industry if mass layoffs resulted.

He explained that the industry was finding it difficult to
find alternatives to the raw materials imported from Japan and
South Korea, while domestic supply was also insufficient to meet
demand.

He said Aprisindo has discussed the banning several times with
the Ministry of Industry and Trade and the Directorate General of
Customs and Excise, but so far the ban remains in place.

Asked as to why the industry did not import from other
leather-producing countries, Djimanto said that besides
efficiency factors, their production system was already
synchronized with raw materials from the two countries.

"Most of the footwear factories here were relocated from these
two countries," he argued.

Jamsostek

In a separate development, the state-owned insurance company
PT Jamsostek under pressure from labor unions, has pledged to
improve its performance and service.

"Jamsostek's management is committed to improving its social
security program benefits and its services to workers and their
families," Supriyono, the company's director of operations and
service, said here on Monday.

Supriyono made the statement in response to criticism by labor
unions and employers who had threatened to quit participating in
the social security program due to what they described as
unsatisfactory service.

Supriyono said the company would also use an on-line system
nationwide in running all programs so that every worker would
have access to services from all of its branch offices, including
the necessary information on their membership in the programs.

The company also recently increased its annual interest rate
in the pension fund program from 14 percent to 16 percent while
occupational accident and bereavement benefits were boosted by
around 50 percent.(rms)