INDEF Explains Reasons Behind Massive Layoffs, Relocation

TEMPO.CO, Jakarta - Enny Sri Hartati, an economic pundit from the Institute for Development of Economics and Finance (INDEF) said that massive layoffs, restructuring and relocation of major companies that have occurred in early 2016, were purely based on business considerations.

"They are actually not leaving. There's a problem in Indonesian investment if they are leaving. It’s purely based on business considerations, but it has an implication on unemployment," said Enny when contacted by Tempo, Tuesday, February 9, 2016.

The government, said Enny, must take into account that higher number of investment are predominantly occurred in capital-intensive industries. "Not in labor-intensive," Enny said.

Enny explained that labor-intensive industries have failed to attract investors due to labor issues. Therefore, according to Enny, the government must immediately address such issues to improve the domestic investment climate. "[Frequent] layoffs showed that investors had been complaining about policy consistency and labor issues," Enny said.

Enny added that the government, through Manpower and Transmigration Minister Hanif Dhakiri, must immediately address labor issues communicating with various labor unions and other stakeholders. Such communication, Enny said, is essential in the attempt to accommodate each party's interest.

"The funny thing is, the [labor] unions are demanding for no more layoffs while also wanting raise. Who knows if in the future they would demand high wages without having to work," Enny said.

Enny said that the challenges would be more difficult as the ASEAN Economic Community allows businesses to have production basis in several countries, but could still penetrate Indonesian market. "Who could blame them for relocating to other countries amidst the national outcry and lack of industrial incentives as well as expensive logistics costs," Enny said.

ARKHELAUS WISNU