Timber, textile sectors suffer massive job losses

Zakki P. Hakim, The Jakarta Post, Jakarta

The Central Statistics Agency (BPS)'s recent labor survey has revealed that the wood and textile weaving industries have lost about 500,000 and 300,000 jobs respectively last year.

The two industries were the main contributors to the shrinking total number of jobs in the country's manufacturing sector, which dropped from 11.50 million in 2003 to 11.07 million last year, according to the 2004 National Labor Force Survey (Sakernas).

Head of the BPS workforce sub-directorate Aden Gultom said that wood industries, in which the number of jobs dropped to 1.1 million last year from 1.6 million in 2003, suffered from the chronic illegal logging problem in Indonesia.

"Industry players could have been reducing their activities to anticipate government measures to curb illegal logging," he told The Jakarta Post on Thursday.

Industry players had said last month that raw materials had become in short supply as the government intensified measures against illegal logging.

Indonesian Forestry Society (MPI) chairman Sudrajat DP said after years of misconduct, it was hard for manufacturers to determine whether a forest product was legal or not.

Consequently, many manufacturers were trapped into acquiring illegal products and could not use them as the authorities forbid them to do so, he said.

According to Sudrajat, about two-thirds of the country's 115 wood-based industries had collapsed, mostly due to Indonesia's high cost economy and aging machinery, and at the same time they could not compete against more efficient China and Malaysia.

The industry has complained that smugglers take Indonesian logs and sell it cheaply to similar industries abroad. In contrast, prices of the same raw materials at home becomes expensive due to the decreasing quota.

The country saw its wood products exports fall from US$3.28 billion in 2003 to $3.17 billion last year, which accounts for about 6 percent of Indonesia's total non-oil and gas exports.

Meanwhile, although textiles remained the country's top export commodity, reaching $7.60 billion last year, the sector also had to bear massive job losses.

Aden said jobs in the textile weaving industry were reduced to 1.1 million last year from 1.4 million the previous year.

The country's textile industry has been struggling to overcome problems with aging machinery, and had received minimal support from local banks. The government has been trying to convince banks that the sector was bankable, despite the textile sector's image as a sunset industry.

Industry players, however, admitted that they were facing tougher competition from better prepared China and India, while they become less competitive due to, among other things, unfavorable labor regulations.

Separately, National Development Planning Board (Bappenas) chairwoman Sri Mulyani Indrawati said the overall manufacturing sector had yet to regain its past role in absorbing excess workers from other sectors, such as agriculture, due to rigid labor regulations.

"Our labor policies haven't changed," she told the Post.

The agriculture sector, meanwhile, lost almost three million jobs last year mostly in food crops and horticulture.

But Aden said the trade and construction sectors could have absorbed excess workers from the agriculture and manufacturing sectors.

The trade sector absorbed an additional 600,000 vendors and 700,000 itinerate vendors to reach 14.1 million and 2.7 million respectively last year.

Meanwhile, housing projects employed 4.2 million construction workers last year, providing new 400,000 jobs compared to the previous year.