Outsourcing inevitable: Employers
Ridwan Max Sijabat, The Jakarta Post/Jakarta
The poor climate for business in the country meant labor dismissals, outsourcing and the recruitment of contract-based workers were inevitable and were expected to increase the future, employers say.
Indonesian Employers' Association (Apindo) secretary general Djimanto told The Jakarta Post here on Thursday many entrepreneurs had closed factories in the country as their businesses were uncompetitive because of poor security, a high- cost economy, raw-material shortages and the absence of legal certainty.
"Labor layoffs and dismissals have been frequent in the forestry, textile and footwear sectors and this is expected to spread to other sectors in the coming months because of the complications (in the economy)," Djimanto said.
He said many major sawmills in Kalimantan and Sumatra had terminated their operations and dismissed their workers since the government had revoked many investors' forest concessions.
Dozens of labor-intensive textile and footwear companies in Banten, West Java and Central Java had also dismissed workers or closed down, either because they had increasingly automated or because they could not compete with cheaper products from China and Vietnam, he said.
Djimanto said many employers had begun recruiting casual or contract-based workers to cut down their labor costs and avoid paying compensation when they had to dismiss workers.
"The labor laws allow labor dismissals but employers have to pay for very expensive (redundancy packages for permanent workers). It is not fair to overburden troubled companies (in this way)," he said. The proportional level of severance payments in Indonesia was far higher than those in Japan, China and Thailand, he said.
He said if the government wanted to stop the layoffs and was determined to cope with the unemployment problem, it should revise the labor laws and give more incentives to foreign investors to put their money into the country.
"The government cannot fight for workers' interests while it is leaves investment and economic growth behind. This state of affairs will remain unless the economy grows, and there will be no job opportunities available unless a better situation is created in which to woo foreign investors," he said.
Separately, Manpower and Transmigration Minister Jacob Nuwa Wea pledged to mobilize labor inspectors to inspect the working conditions in companies.
"With Law No. 21/2003 on labor inspection, labor inspectors have the authority to prosecute employers violating core labor standards," he said.
Nuwa Wea warned employers they were only legally allowed to hire contract-based workers for seasonal work, ranging from one- month to six months terms, and could only subcontract out jobs that were not included in their core business.
"Employers infringing these rulings must be brought to the courts." Certified labor inspectors had the authority to do this, he said.
The poor labor conditions in the country and the ease with which employers could dismiss their workers were due to the ineffectual policing of the sector, he said. This had been caused by the poor implementation of regional autonomy during the past four years.
Nuwa Wea said his office could no longer supervise labor inspectors in the regions who had been subordinated to local governments under the autonomy system.