Indonesian Employers Association terms workers demand for salary increase as “unrealistic,” Reuters reports. The workforce was further warned of layoffs considering the slowdown in Southeast Asia’s largest economy.
The labour-intensive sectors such as mining and manufacturing have experienced thousands of job loss in the recent months, as economic growth has slowed down to its weakest pace in the last six years.
“The economy is slowing and companies all over the country are already either closing down or cutting jobs,” Hariyadi Sukamdani, head of the Indonesian Employers Association told The Fiscal Times. “And this could get worse if the annual wage increase is too high.”
Sukamdani further added that firms in the association had cut 50,000 jobs since January. Thousands of workers in several cities marched to protest layoffs and call for higher wages, considering the increase in food prices that made Indonesia’s annual inflation stay above 7 percent in August.
Some of the workers agenda during the protests was to reject the government policy that provides easy access to foreigners wanting to work in Indonesia, by lifting the requirement for them to master the Indonesian language.
“Workers rejected the policy because the rates of unemployment and layoffs in Indonesia are currently high. Based on data from the Central Bureau of Statistics (BPS), the number of unemployed people rose by 300 hundred thousand to 7.45 million in February 2015,” Mirah Sumirat, the President of the Indonesian Workers Unions Association (Aspek Indonesia), said in press statement on Tuesday.
See: Foreign Workers in Indonesia obliged to join the Social Security System
Union leaders have called for a rise of at least 22 percent in the minimum wages in Jakarta, which saw a rise of 11 percent in its minimum wage to 2.7 million rupiah ($191.56) a month.
The Fiscal Times reports that negotiations are currently underway between the employers, local administrators and workers to determine minimum wages later this year. While unemployment in Indonesia stood at 5.81 percent in February, analysts say this covers the informal sector and the real figures could be much higher.
The Central Java chapter of the Indonesian Employers Association (Apindo) has said that for certain companies, laying off workers is avoidable due to the current economic slowdown, AsiaOne reports.
“No businessmen want to lay off their employees, but the current economic conditions have made it difficult for them to keep their companies in operation,” Frans Kongi, Chairman of Central Java Apindo was quoted by Antara news agency. Thousands of labourers have held country-wide demonstrations to protest against the layoffs and ask government to undertake measures to control slowdown of the weakening rupiah.
“Nearly all countries that become export destinations of Indonesian products pose negative growth,” Frans added, calling on employees to understand that companies’ managers were working hard to keep their factories operational.
“If the workers understood the condition of their companies, they would have supported the policies taken by the management. But what they did was to carry out demonstrations,” he said.
Economist Drajad Wibowo has warned that Indonesia will have more than 500,000 new jobless people this year if the ongoing economic slowdown continues.
News sources: reuters.com; thefiscaltimes.com; antaranews.com and asiaone.com
Also read: Challenges to HR management in Indonesia
Image credit: thefiscaltimes.com