Up to 1 million workers may face layoff, says minister

Up to 1 million workers may face layoff, says minister

The Jakarta Post, Jakarta

The economic hardship faced by businesses, in particular due to
the recent fuel prices hike, may result in up to 1 million
workers losing their jobs by the end of the year, a minister
says.

"Others estimated that there could be up to two million
workers forced out of work, but our study showed that the number
would be only as much as one million," said Minister of Manpower
and Transmigration Fahmi Idris on Thursday.

The government, under pressure to avoid fiscal disaster amid
an inflated fuel subsidy, increased on Oct. 1 domestic fuel
prices by an average of 126 percent.

Operating costs of several industrial sectors have gone up by
10 percent to 50 percent since, prompting companies to consider
reducing their workforce to stay in business.

Fahmi added that the sectors most affected were the furniture
and timber industry, as well as textiles and garments.

Aside from the fuel prices hike, the furniture and timber
industry are currently also having difficulties in obtaining raw
materials due to the lower logging quota and illegal logging.

"Meanwhile, textiles are facing tight competition due to
China's massive expansion," he said.

However, Indonesian Business Association (APINDO) chairman
Sofyan Wanandi promised that companies under the association
would not terminate any of their workers in the next six months.

"We will try not to lay off workers in the next six months.
But, we cannot guarantee this for SMEs (small and medium
enterprises)," Sofyan said after signing a memorandum of
understanding between APINDO and state workers insurance company
Jamsostek on Thursday.

Bigger companies, he explained, had more capital and therefore
were more resilient during times like this. Sofyan estimated that
there could be hundreds of thousands of workers in SMEs facing
possible layoffs.

As of February 2005, there were 105.8 million workers
nationwide, of which around 79 million were working with the
country's 42.3 million SMEs.

Meanwhile, Jamsostek director Iwan Pontjowinoto added that his
company had set aside Rp 1 trillion for possible disbursement of
worker's pension funds.

Workers registered under Jamsostek pension fund program
usually cash in their benefits after being retrenched.

There are currently 115,000 companies that have registered 7.5
million active workers in Jamsostek's workers insurance scheme.

Meanwhile, responding to demands of adjustments in the minimum
regional wage (UMR), Fahmi explained that it would depend on the
cost of living in each area as well as the level of economic
development of the provinces and the productivity of companies.

"We have set the UMR based on the cost of a decent standard of
living and not the minimum cost. It will be effective in
January," he said.

This standard includes education and housing costs aside from
the minimum cost of living. The amount varies between provinces.

Jakarta's minimum wage currently stands at Rp 711,283. Labor
unions have demanded that it be raised to Rp 1.2 million
following the rising costs of basic commodities.