The country's manufacturing industry is not in good shape. Although the flow of investment in the manufacturing industry is relatively heavy, the trend of layoffs in this sector is also relatively large.

Referring to the report of the Ministry of Investment / Investment Coordinating Board (BKPM), manufacturing investment realization grew 24.68% year on year (yoy) to IDR 337 trillion in the first semester of 2024. The manufacturing industry contributed 40.6% of the total national investment realization.

However, the wave of layoffs continues to occur in the manufacturing industry, especially in the textile and textile products (TPT) sector, which is a labor-intensive sector.

The Confederation of Workers Unions of the Archipelago (KSPN) stated that there were 14,500 textile workers who were laid off from the beginning of the year to July 2024.

This number has the potential to increase to 15,000 workers given the planned closure of a textile factory in Bandung, West Java in August.

Chairperson of the Indonesian Employers Association (Apindo) Shinta W. Kamdani stated that the potential for layoffs in the manufacturing industry still exists, especially in labor-intensive export-oriented sectors such as TPT. This sector has experienced tremendous pressure both in terms of market and business cost inflation.

“Other manufacturing subsectors have a less risk of layoffs, but there is potential for a prolonged hiring freeze,” he said on Tuesday (30/7).

In general, Apindo estimates that the condition of the manufacturing industry will be more challenging until the end of the year. Apart from being triggered by an increase in business operating costs as a side effect of the rupiah exchange rate correction, people's purchasing power has also not stabilized so that market demand has decreased.

Not only that, some businesses are also still waiting and seeing for business expansion due to the government transition.

SOURCE