Continued Layoffs in Indonesia's Textile Industry Amidst Approaching Eid Holiday Bonus Payments


The wave of layoffs in the national Textile and Textile Products (TPT) industry is reported to be ongoing. Moreover, it is said to be increasing as the moment for Eid al-Fitr 2024 holiday bonus payments approaches.

The surge in layoffs is suspected to be a tactic employed by companies to avoid making Eid holiday bonus payments, as revealed by the Workers' Union. However, they note that the trend of layoffs to evade holiday bonus payments this year is not as significant as in previous years.

Ristadi, President of the Confederation of Nusantara Workers' Unions (KSPN), stated that the trend of layoffs before Eid was prevalent around 2018-2019. These layoffs were strategically timed, as company management arranged for employment contracts to end just before the Eid holiday bonus payment period or a week before Eid.

"However, after negotiations and discussions with the companies, they admitted to facing cash flow difficulties. Therefore, layoffs were inevitable. They maneuvered costs in this way," he said on CNBC Indonesia's Profit program on Wednesday (27/3/2024).

"But indeed, the cash flow of the respective companies is in dire straits. They claim to do anything other than layoffs. So, if there are layoffs happening now, it's because the company's situation is difficult. The tactic of layoffs to avoid holiday bonuses is almost nonexistent," he added.

However, Ristadi continued, there are still some companies that are dishonest, trying to find ways to carry out layoffs and avoid the obligation to pay holiday bonuses.

Therefore, he emphasized the importance of the government continuing to implement reforms. Moreover, he said, government labor inspectors are limited. Additionally, not all companies have workers' unions, making it difficult to advocate for workers' rights.

"The total number of workers nationally is around 139 million people, with approximately 57 million being permanent. However, there are only about 1,700 labor inspectors. And the number of workers who are members of workers' unions is only about 4-5%, less than 5 million people," he explained.

"This means there is a wide gap between companies and oversight. Thus, it is difficult for monitoring and supervision," he added.

Layoff Wave

In the same context, Redma Gita Wirawasta, Chairman of the Indonesian Association of Fiber and Filament Yarn Producers (APSyFI), reaffirmed similar sentiments.

"It's the same as what Mr. Ristadi mentioned. There's a shifting phenomenon, not all companies are unscrupulous. It's different now. Layoffs are no longer due to the Eid holiday bonus moment, but because since the third quarter of 2022, the cash flow of the textile industry has been continuously eroding," said Redma.

"This happened after Covid and the influx of imported products into the domestic market. On the other hand, due to geopolitical tensions, exports have been disrupted," he said.

As a result, Redma said, national TPT companies are facing increasing difficulties.

"Whether we like it or not, they have to reduce production, which eventually leads to layoffs. So, it's not because of the Eid holiday bonus moment. This has been happening for the past two years, and layoffs are still ongoing until the first quarter of 2024," said Redma.

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