Special Report: Layoffs storm may hit harder than expected

The Jakarta Post, Fri, 03/13/2009 2:53 PM  

A wave of layoffs in the manufacturing sector has struck the country hard. The Jakarta Post's Hans David and Faisal Maliki Baskoro visited industrial areas in Cilegon in Banten, Pulogadung district in East Jakarta, and Kerawang in West Java to get first hand reports over the level of hardship in these areas. Here are the stories: 

The city of industry Cilegon in Banten has already felt the pinch from the worsening global economic downturn despite relatively less workers being directly affected. 

Daily business in the city, which is home to some of the nation's largest industries, such as Indonesia's largest steel manufacturer PT Krakatau Steel, Australian steel giant Bluescope Steel, and Indonesian based petrochemical company Chandra Asri, is slower than the normal conditions pertaining before October. 

Shopping centers, shops, and even banks appeared quiet and to be getting fewer customers. 

"This city, although it's a small one, usually gets crowded during the first week of the month," said Krakatau employee Anto. 

"Most companies here have yet to discharge their workers, but the city's business activities are already declining. I could not imagine if companies here started to permanently discharge their workers. This city could fold up," he said. 

Krakatau's 5,600 workers have been the heart of the economic engine of Cilegon for a long time. 

"During payday for Krakatau employees, the city is so crowded, but now, with the company reducing workers' benefits, the local economy is slowing down, said Anton. 

Suyanto, a food vendor near heavy equipment company PT Sankyu International Indonesia, said customers had declined since several nearby factories started to *house' their employees. 

"Usually it gets crowded during lunch, but now the workers eat their lunch at home," he said. 

Industries in Cilegon have reduced production capacity to cope with the slowing demand, but are said to be still keeping the workers on their books until the April elections are over, to help the government to avoid disturbances or riots. 

Many of the industries there are trying to survive by reducing production costs. 

The state-owned Krakatau company, for instance, has decided not to increase salaries or provide other incentives to its employees such as overtime and normal yearly bonus, as an alternative to layoffs. 

"Krakatau is avoiding layoffs by reducing employee costs and re-scheduling working hours," said Krakatau spokesman Dede Rusli. 

This move was followed by other companies there, such as Chandra Asri and Bluescope. 

"Chandra Asri is reducing its operations and has switched to doing maintenance while waiting for the economy to get better," said Bangun Siregar, a company worker. 

He said that reducing operations usually means that there would be layoffs but he was safe for now, as the company still retained its employees, but as an expense. 

"The company is limiting overtime and yearly bonuses to push down employee costs," he said. 

In other industrial areas, such as in Pulo Gadung in East Jakarta things are worst than in Cilegon. 

The areas are now occupied with deserted factories, empty parking lots and men just sitting around talking and dreaming of better days. There are a lot of people with no jobs hanging about. 

"There used to be a lot of workers eating their lunch here," Djudjuk, a food stall owner said. 

"But ever since the crisis, there were less and less workers coming here. Daily profits plunged by more than 50 percent and I don't know if things could get any worse," she added. 

Djudjuk then glanced quickly to her empty food stall, and the dusty wind blew, as she rubbed her eyes. 

Life has also been hard for Ojek (motorcycle taxi) drivers in the area after a lot of workers there have been discharged recently. 

"We used to earn around Rp 40,000 (US$3.3) per day but now we are very lucky to earn Rp 20,000," a seasoned driver, Harto, said. 

The crisis has also affected the local economy surrounding the Karawang industrial zone on the outer skirts of Bekasi. 

According to data from the Central Statistic Agency (BPS), there were around 11,000 workers in Karawang last year with around 5,700 of them working in the manufacturing sector within the industrial zone. 

However, thousands of these workers has been dismissed both temporarily and permanently since the crisis hit the area in November. 

Upon entering the industrial zone, only a couple of motorcycles and cars were seen on its 5,000 square meters parking lot. There are less people around and therefore less vehicles too. 

Most of the factories there have been put out of business, leaving only security guards at the front gate. 

The wave of layoffs amidst the economic downturn has reportedly affected 237,500 workers nationwide between October and March, a total far exceeding previously released government reports. 

Indonesian Employers Association (Apindo) chairperson Sofyan Wanandi said on Wednesday that Apindo has collected data from its branches in all regions and found that the actual total for job layoffs due to the impact of the global economic downturn was far higher than the government's latest figure of about 30,000 workers . 

Sofyan said the government's data did not fully record the actual layoff statistics. 

"I suppose it only records the layoff of permanent workers. The government did not receive data on daily and outsourced workers." 

But there is wide speculation that the government is trying to keep the figures looking low in order to look good during the upcoming legislative and presidential elections.

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