Indonesia struggles to stem layoffs

JAKARTA, May 2, 2020, NST. About a third or around 15,000 from about 40,000 manufacturing companies remain operational in Indonesia in the wake of the Covid-19 pandemic, New Straits Times reported.

The grim update was revealed by Coordinating Economic Minister Airlangga Hartarto in a press briefing on Thursday, according to The Jakarta Post.

He said also 4.7 million workers in the manufacturing sector were still working out of the usual 17 million, attributing it to about 20 per cent of the country’s gross domestic product.

“We hope companies will be back in operation when the situation returns to normal,” Airlangga said in referring to the global pandemic.

Many businesses in the country have temporarily shut down or are working at minimum capacity to comply with the government’s stay-home order to contain the disease that has infected over 10,000 people nationwide.

As a result, the country’s Purchasing Managers’ Index, a monthly survey of trends in the manufacturing sector, recorded a contraction to 45.3 from 51.9 per cent between February and March, the steepest decline since the survey began in 2011.

As many as 2.2 million people are out of work, according to the Manpower Ministry in its latest update on April 20. More than half are formal sector workers furloughed or laid off by 43,690 firms.

The government has launched tax incentives for the manufacturing industry, including individual income tax exemptions, import tax deferrals and corporate tax discounts.

Earlier, it also launched the pre-employment card programme, a mix of unemployment benefit and skill-training programme, to provide benefits worth 3.5 million rupiah for people whose jobs or small businesses were affected by the outbreak.

“The incentives will be given on the condition there are no layoffs. We hope the incentives can serve as a cushion to protect our workers,” Airlangga said.

The government has also reduced employment insurance payments for companies that keep their workers. Firms can get 90 per cent reductions both for work accident and life insurance payments.

“By easing the insurance payments, we hope companies can fulfil their obligation to pay (the Aidilfitri) holiday bonus,” Manpower Minister Ida Fauziyah said in the same briefing.