Nearly 50,000 factory workers in Indonesia have been dismissed in recent weeks as the country’s economic slowdown has begun to pinch the country’s labor intensive industries.
Around 200 footwear manufacturers in Tangerang, Bandung and Surabaya have laid off about 40,000 workers so far, according to the Indonesian Footwear Association (Aprisindo). In addition, 120 textile producers in Bandung regency, West Java, took similar measures, firing at least 6,300 workers, according to the Indonesian Textile Association (API), NewsNow reported.
The business groups said Tuesday that the firms, mostly small and medium enterprises, had been hurt by domestic sales plunging significantly as people’s purchasing power weakened on the back of an economic slowdown.
Indonesia’s economy decelerated to 4.71 percent year-on-year (yoy) in the first quarter, its slowest pace in nearly six years, partly due to lower domestic consumption.
Aprisindo chairman Eddy Widjanarko said that shoemakers’ sales dropped by nearly 50 percent in the first quarter due to a decline in orders in the local market. The decline continued in April and no signs of recovery were expected in the coming months, he added.
“Normally, we produce a lot ahead of Eidul Fitr as demand rises. But, now we are stopping operation because stocks are piling up in warehouses,” he told The Jakarta Post.
Demand for shoes and clothing usually increases a month ahead of Eidul Fitr, which will fall on July 17-18 this year.
Eddy further said that the current wave of layoffs could last longer than usual, with the impact likely to be felt within eight months.
Similarly, API chairman Ade Sudrajat had said textile firms trimmed production time from seven days to just three days as a result of weak sales. Sales slumped by more than 40 percent in the January-April period from the past year.
“We are really shocked by this situation. Our warehouses are full because we cannot sell,” he said.
A recent Nielsen survey revealed that more than half of Indonesians considered the country is currently “in a recession”.
