Unemployment in Indonesia: Layoffs in the Textile & Commodity Industries
Andi Gani Nenawea, Chairman of the Confederation of All Indonesian Workers' Union (KSPSI), said that layoffs in Indonesia could reach up to 100,000 in 2015 as various companies are cutting on operational costs amid the nation’s slowing economic growth. The most severely affected industries are the textile industry and commodities (such as the coal and oil & gas sectors).
According to Nenawea, a total of 67,000 Indonesians have already lost their jobs this year and if the government does not intervene or fails to undertake serious efforts to boost the domestic economy, the figure can rise up to 100,000. Most of the layoffs this year occurred in Indonesia’s textile industry. Nenawea estimates that approximately 45,000 jobs have been lost in this industry so far this year.
Ade Sudrajat, Chairman of the Indonesia Textile Association (API), added that there are currently more than 100 Indonesian textile and garment producers, mostly small-scale, that are on the verge of collapse due to reduced domestic demand for Indonesian textile products (stock piles of textile products are piling up in warehouses). Another 36,000 jobs could be lost if these companies indeed collapse. Demand has fallen as Indonesia’s economic slowdown continued into 2015 (in the second quarter of 2015 the country’s economic growth pace touched the six-year low of 4.67 percent y/y) and people’s purchasing power has been weakening accordingly.
The weak rupiah, which has depreciated about 13.6 percent against the US dollar so far this year, causes financial trouble for textile companies as yarn and fabrics (both natural and manmade) need to be imported from abroad.
Indonesian Rupiah versus US Dollar (JISDOR):
| Source: Bank IndonesiaSudrajat would like to see the Indonesian government raise its support for the local textile industry. For example by cutting the electricity tariff by 40 percent and establish trade barriers for a number of imported textile products in a bid to help local textile manufacturers and make their products more competitive in the international market.
According to the latest data from Statistics Indonesia (BPS), there are 7.45 million unemployed people in Indonesia.