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)