IO, Jakarta – Amid the COVID-19 pandemic, the fears of the Confederation of Indonesian Trade Unions (KSPI) regarding massive layoffs have indeed been realized. Based on data from the Jakarta Manpower, Transmigration, and Energy Office, 162,416 workers reported having being laid off. 30,137 workers from 3,348 companies were permanently let go, while 132,279 workers from 14,697 companies were laid off temporarily – but without pay. This data was released by the Jakarta Manpower and Transmigration Instagram account.
KSPI President Said Iqbal pointed to two serious threats facing workers. First, the potential of serious illness or death of workers because they are still required to work in not isolated or with proper physical distancing. The second is an emergency layoff that will threaten the livelihoods of tens to hundreds of thousands of workers.
4 Strategies to Avoid Layoffs
According to Said Iqbal, the threat of layoffs was caused by 4 factors, as follows: First, the availability of raw materials in the manufacturing industry which was running low. In particular, raw materials originating from imports, such as from China, and other countries that are also exposed to Corona. The industries that will be hit are labor-intensive or labor-intensive, such as textiles, shoes, garments, food, beverages, electronic components, to automotive components. When raw materials become unavailable, production will decline. When production falls, there is the potential for employee reduction through layoffs.
Second, the weakening of the Rupiah against the dollar: it now stands at IDR 17 thousand. If this situation continues, both labor-intensive and capital-intensive companies will be burdened with high production costs – especially companies that have to buy imported raw materials. “The company buys raw materials in dollars and sells in Rupiah, which continues to weaken. Coupled with the people’s purchasing power which has declined sharply, companies will have difficulty raising selling prices. This will lead to company losses, which threaten the continuity of work,” said Iqbal.
Third, the decline in tourist visits to Indonesia. “From the start, the tourism industry has been hit. Hotels, restaurants, tourist attractions, airports, seaports, visitor numbers have dropped dramatically, due to corona. Many have even laid-off workers,” said Iqbal. Currently, there are concerns, shortly there will be massive layoffs in the tourism industry.
Fourth, the drop in oil prices and the composite stock index. As a result of falling world oil prices, Indonesia’s revenue from crude oil exports will also fall. For the record, world crude oil prices fell to a level of US $ 30 per barrel, far from the assumption of the price of Indonesian oil or ICP in the 2020 State Budget (APBN) of US $ 63 per barrel. “This situation has caused the State Budget to str to look unlikely. Further impact: since state income is lacking, social assistance will be smaller, not to mention the cost of coping with corona, which could be threatened as well. When social assistance and company profits are reduced, while massive layoffs are in sight, the fate of workers will be even worse,” said Iqbal. Not to mention the composite stock index, which also continues to fall. Domestic companies (for example the food industry) are at risk of losses because the value of their shares has fallen.
These four factors will lead to a number of layoffs. The decline of the tourism industry, for example, caused the hotel sector, restaurants, trade, to tourism support services to be hit and cut back on employees. According to Said Iqbal, if this situation is not resolved, in the next 2 months the automotive industry, automotive components, electronic components, textiles, garments, and shoes will also follow suit by reducing workers. “It could be that in Jakarta there will be an increase in the number of workers laid off from garment and textile companies in the Pulogadung, Cakung, Cilincing, and Marunda regions,” he continued.
Moreover, reports from East Java, Central Java, and West Java show how currently thousands of workers have been laid off. “Recently the West Java Manpower and Transmigration Office said that as many as 40,433 workers were temporarily laid off and 3,030 workers were fired,” said Said Iqbal.
KSPI’s proposal to prevent layoffs
In such a dire situation, KSPI advises employers and the government to do the following:
1) This is the right time to reduce production costs of the private company, by dismissing workers while still paying full wages. For production to continue, workers can take turns off. Thus there are electricity savings, catering, etc. After all, turnover is also down.
2) The government should control fiscal and monetary policies so that the Rupiah exchange rate does not weaken further and the composite stock index does not plummet.
3) If raw materials are not available because supplier countries are in lockdown due to corona, the government should immediately pass regulations in the form of import of raw materials (as long as these raw materials are not available in Indonesia), especially for labor-intensive industries. For example, by applying a zero Rupiah import duty and there is no charge to imported goods. Because it could be, in this difficult situation, the industry will look for raw materials from countries that have not been exposed to corona.
4) Provide cash assistance to workers, online transportation drivers, and other small communities. This would be like what was done in England. On the other hand, it will help the business world, because part of the wages of workers are subsidized by the government.
5) Providing incentives to the tourism, retail and other industries affected so they can survive amid a corona pandemic. For example, by removing bank loan interest for entrepreneurs in the tourism sector or removing tourism taxes, allowing debt installments to be postponed for a year.
6) Immediately reduce the price of premium fuel so that the middle to lower classes including the workers have more purchasing power. Besides, the price of industrial gas will need to be reduced, so that factory production costs can go down.
7) Urge BPJS Employment to issue a reserve fund from the deposit interest of participant funds and JKK funds to buy masks and hand sanitizers to be distributed free-of-charge to all workers in Indonesia.
KSPI asks the Parliament not to betray the people
KSPI further asked the Indonesian Parliament to stop discussing the omnibus law on the Work Creation Bill. “The Parliament should not betray the people by taking the opportunity to discuss omnibus law amid a corona pandemic and layoffs,” he said.
KSPI urges the Parliament to focus on the above two things. If the Parliament ignores KSPI’s demands and continues to discuss the omnibus law, in April 2020 50,000 workers will demonstrate before Parliament. Demonstrations will also be held simultaneously in 20 other provinces.
Deputy Chairman Commission X in the Parliament, Sri Rahayu in her press release stressed that there should be no layoffs (Termination of Employment) resulting from the Covid-19. Yayuk, her nickname, hopes that there will be a breakthrough made by the Government so that layoffs do not occur due to the impact of the Covid-19. The PDI-Perjuangan politician further explained that the risk of this pandemic that affects indirectly is the potential for layoffs to haunt companies in industries that depend on community mobility. Examples of companies that might be affected include the airline and tourism sector. Besides, the manufacturing industry, which supplies raw materials supplied by China. “We must observe the true impact on the community and the business world,” added the legislator in the East Java electoral district VI. Yayuk also appreciated the breakthroughs of the Government and banks which held a meeting to adjust their views on policies in anticipating the impact of the Coronavirus on the Indonesian economy some time ago.
Meanwhile, Member of Parliament from Commission IX Obon Tabronni asked the government and employers to avoid layoffs, especially in industrial sectors that are vulnerable to being affected by the spread of the Covid-19. The move, said Obon, would take the form of an order from the Manpower Act which states that the government and employers must make efforts to avoid layoffs as far as possible. “Workers in the tourism and hospitality sectors have been affected by a declining level of visits. So it is in the retail sector. Don’t ride Covid-19’s disaster to lay off workers,” he said in writing last March. (Dan)