Policy to Prevent Layoffs Deemed Urgent

KOMPAS/PRIYOMBODO

Footwear factory workers shop for lunch from street vendors outside the factory in the Gerendeng area, Karawaci, Tangerang City, Banten, Monday (11/14/2022). Layoffs are currently hitting a number of labor-intensive industries, such as textiles and textile products or TPT and footwear products.

JAKARTA, KOMPAS — The issue of employment termination or layoffs continues to spread, especially in export-oriented, labor-intensive industries. Preventing waves of layoffs is deemed urgent. The preventive measure needs to focus on labor and business continuity.

"The layoff phenomenon must be seen from two sides, namely to prevent it from spreading and after layoffs have occurred. The government still needs to offer incentives for workers and employers. However, the more important thing now is to issue a preventive measure to curb the spread of waves of layoffs in 2023," Center for Reform on Economics (CORE) Indonesia executive director Mohammad Faisal said on Tuesday (10/1/2023) in Jakarta.

Incentives for layoff prevention could target production costs and be given to entrepreneurs when entering the production stage. Thus, government incentives would not just be in the form of tax reductions during postproduction. The requirements for incentives should also be loosened so that many entrepreneurs were eligible. Workers’ incentives like the Preemployment Card program should still be intensified.

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Previously, industrial relations and social security director general Anggoro Putri of the Manpower Ministry Indah said that not all are labor-intensive businesses were export-oriented. In the midst of global economic pressures, a number of labor-intensive businesses oriented towards exports had survived. Some were the opposite. The Manpower Ministry was reviewing the relevant employment regulations and policies to overcome the mass layoff phenomenon.

International Labor Organization (ILO) senior program officer Lusiani Julia said that the ILO Conventions did not recognize the principle of no work, no pay. However, this principle had been practiced in several countries. She said the best way to deal with the issue of a global recession, which would impact export-oriented, labor-intensive businesses still remained social dialogue to find ways to prevent layoffs, in terms of both employment and industries.

"Indeed, inevitably the government must interfere. Policies must be made immediately, but the spirit must be just and transparent. The Wage Subsidy (BSU), Job Loss Guarantee (JKP), and the Preemployment Card [programs] can be maximized further," said Lusiani.

KOMPAS/TOTOK WIJAYANTO (TOK)

Visitors received an explanation from the booth staff at the 2022 Indo Intertex (Inatex) textile and textile product industry exhibition at the Jakarta International Expo, Kemayoran, Jaakrta, Thursday (11/8/2022).

Paid when working

Nurdin Setiawan, the deputy chair of manpower and human resources development at the Indonesian Textile Association (API), explained that “no work no pay” referred to unpaid wages if workers did not work and/or did not do any work. According to him, this was regulated in Article 4 of Government Regulation (PP) No. 8/1981 on Wage Protection, which was then replaced by Article 24 of PP No. 78/2015 on Wages and Article 40 of PP No. 36/2021 on Wages.

He said export-oriented, labor-intensive companies and their ecosystems were asking the government to make regulations on flexible work hours, because the industry was not doing well. The reason was a 30-50 percent decrease in demand among export destination countries, such as the European Union and the United States, which were influenced by the global recession, the geopolitical impacts of the Russia-Ukraine war, and stagflation. According to him, the decline in orders had resulted in a reduction in labor utilization, so workers were not working while businesses must continue to pay their wages.

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"How to keep the companies sustainable and maintain labor relations? One solution is to implement flexible work hours, so if there is an order, workers can continue to work with paid wages. However, if there is no order and workers are off, the companies do not pay wages because they are not working to produce an output," Nurdin said, referring to the “no work no pay” policy proposed by labor-intensive business owners last year.

According to him, the API had asked the government to accommodate this in a regulation. It would also be temporary, until economic conditions returned to normal.

This article was translated by Hyginus Hardoyo.