Scrimping, saving in the recession
Scrimping, saving in the recession
The writing is on the wall. The economy is slowing down,
prices are going up and people are being laid off. Hard economic
times lie ahead as analysts warn of a deep recession. The Jakarta
Post reporters Achmad Junaidi, Ati Nurbaiti, Arief Suhardiman,
Benget Simbolon, Emmy Fitri, Kornelius Purba and Riyadi talked to
a cross-section of society to find out how they are coping with
that not-so-secure feeling. Related stories are on Page 9.
JAKARTA (JP): In times of crisis, some people still find
opportunities in others' misfortune.
Intan recounted a staff meeting at the East Jakarta employment
service bureau where she works.
"These times are a challenge for us," the boss said.
"Unemployment will increase, and many people who are laid off
will come to us."
He noted that as job vacancies were declining, "we need to be
more aggressive and send more proposals to other companies".
For many of us, it is hard keeping a cool head amid mounting
worries.
In Cilandak, South Jakarta, Sita is afraid of losing her job
in a prestigious company.
As a member of the firm's environmental impact analysis team,
she fears she and her colleagues could go "anytime".
"Projects are being shelved or delayed, so who wants an
environmental analysis?"
Five months pregnant, she has been hemorrhaging and confined
to her house, worried sick over her job, and about paying her
house mortgage.
Others are cutting back. A housewife says she has scaled down
her shopping, from three shopping carts to just one, in her
monthly supermarket trips because prices have gone up in recent
months.
Indonesia has not felt the pinch as severely as Thailand,
where the economic downturn in the region began, and where the
woes have taken their toll in suicides.
Between July 15, when the monetary crisis began, and Oct. 1,
no fewer than 13 suicides attributed to financial woes were
reported in that nation.
Indonesia may be better off for now, but that is hardly
grounds for complacency. There is no doubt the recession will
eventually hit here just as hard.
While it will be toughest on the poor, it may be no less
damaging to Indonesia's burgeoning middle class, who have grown
accustomed to the good life in the last decade.
"We're really feeling the crunch," an architect's wife says.
"Luckily, I've got my mother-in-law, who I can turn to when I
need to borrow money."
Rather than wallow in stress and self-pity, she says the
family escapes by going to the movies.
Shops in Jakarta's sprawling malls are virtually deserted,
despite alluring discounts, she notes. "But cinemas are full --
with people like us, I bet."
Companies are closing down and laying off their workers.
Others have begun tightening their belts, cutting down on
expenses and delaying payments to suppliers and contractors
whenever possible.
The situation harks back to earlier recessions, including
severe downturns in the early 1980s and beginning of this decade.
Gary Nagari Munthe, director of Business Chronicle
publication, recalls that in the 1970s "poor people, particularly
those paid a daily wage, suffered the most.
"'It's very hard to earn money now', was a sentence that I
heard very often on the streets or other places I visited in
those days...People who were previously generous to me became
thrifty during the recession," Gary recalled of his days as a cub
reporter on The Indonesia Times.
Although there were not many layoffs, "I noticed people found
it hard to get new jobs".
Big government projects were also postponed and canceled, as
has happened this year, but Gary thinks the current recession
will be harder.
Companies have more offshore debts, making them vulnerable to
the plunge in the rupiah's value.
Many analysts blame the credit crunch imposed by the monetary
authority, and ensuing soaring interest rates, for being the kiss
of death for firms battered in an already reeling economy.
Masyhud Ali, president of Bank Putera, terms the policy
"fatal" in driving companies into bankruptcy and banks into
insolvency.
"That was a grave mistake...We're paying very dearly for it."
In this vicious cycle of misfortune, when heavily indebted
companies fold, they bring banks down with them, in turn leading
to more bankruptcies.
Senior economist and former finance minister Frans Seda
recommends prudence, especially in cash flow management, as the
best course of action for the current situation.
Efficiency can be achieved through effective use of all
available resources and not necessarily through layoffs, Frans
says.
"Businesses should focus on products that can be absorbed by
the market. We have no choice during these lean times.
"We should also be careful because we don't know when this
will end. We hope it will be sooner than expected."
A positive and determined attitude is important.
"At least, they (hard times) make us realize that the economy
is subject to booms and recessions," Frans says.
There is no doubt the biggest fear in these bleak times is
receiving the pink slip of redundancy.
Minister of Manpower Abdul Latief, a successful businessman
who built the ALatief Corporation in malls and property before he
joined the cabinet in 1993, has appealed to employers not to
dismiss their workers.
"As I have often stated in the case of 16 banks recently
closed by the government, employees should not be victimized
because this is not their fault. I also ask workers to remain
calm...
"You have my word that my ministry will do its best to protect
workers' interests..."
His ministry said last week it had received applications from
50 companies to lay off around 10,000 workers due to the economic
downturn. The number could swell if the situation worsens.
The government is banking on small and middle-sized companies
to absorb as many workers as possible.
Latief said he had received President Soeharto's approval to
request that PT Jamsostek, the state-company which manages
workers' social security funds, inject Rp 2 trillion into state-
owned banks for loans to the firms.
"We must encourage these companies to continue developing,
especially during the hard times," he says. (team)