Outsourcing inevitable: Employers

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.