"Layoffs Still Loom over the Labor-Intensive Sector", 16 May 2023

Amid the national economic recovery, the footwear industry and TPT products have not fully recovered from the effects of the Covid-19 pandemic and the global economic slowdown. This is evident in the ongoing wave of layoffs in this labor-intensive manufacturing sector.

The demand for export markets in both sectors has weakened due to global economic pressures. This situation is further compounded by difficulties in boosting domestic sales as a result of the influx of imported goods. Consequently, a decline in production leading to job cuts has become inevitable.

For instance, PT Dean Shoes, a shoe manufacturer located in Karawang Regency, West Java, ceased operations and closed its factory as of 14 April 2023. As a result, 3,329 employees were laid off.

Fajar Ahmad Faizal, who was still handling public relations affairs for PT Dean Shoes when interviewed prior to the factory closure explained that the global economic uncertainty caused by the Russia-Ukraine war had led the brand owners to reduce orders from PT Dean Shoes since 2022. Initially, the company coped with this situation by implementing a four-day workweek.

"Along with these conditions, the minimum wage in the regency increased significantly. Our investors were seeking cheaper production locations to ensure more sustainable operations. The layoffs were carried out on 6 April and 14 April, so they were completed before the Idul Fitri holiday," said Fajar, who himself was not spared from the layoffs.

PT Dean Shoes has been manufacturing shoes under the Nike and Under Armour brands... Prior to the cessation of operations, the company was solely focused on fulfilling the remaining orders from Nike...

The phenomenon of job cuts has also affected the TPT product industry. Kwee Liang Cing, owner and director of PT Bentara Sinarprima, a textile company producing fabrics for bed sheets and fashion located in Bandung regency, West Java, stated that they had reduced their workforce from 500 employees to 260. Previously, workers used to work 5 to 6 days a week, but now they only work 1-2 days a week.

Lilik, as he is commonly known, explained that the factory's production capacity has been continuously declining since 2022 due to a sharp drop in demand. The factory's production capacity, which used to reach 2 to 2.5 million meters per month, is now only utilized at 30 to 35 percent. Fabric production has decreased to around 700,000 to 800,000 m per month.

The Garment and Textile Workers Union Federation (Garteks) chairman Ary Joko, stated earlier this week that the labor-intensive footwear and TPT industries were initially hit by social restrictions due to the Covid-19 pandemic...

"Our total membership amounted to 60,000 people. Throughout the pandemic in 2020 to 2021, 12,300 of our member workers experienced layoffs...When there was a brief recovery in 2021, we rehired workers who had been previously laid off," said Ary. However, before they could fully recover from the pandemic, the global economy worsened again due to the Russia-Ukraine war. The export market demand also weakened...