The severance rights of layoff employees are still not clear, textile entrepreneurs speak up

JAKARTA – The Labor Association mentioned a number textile company who carries out Termination of Employment Relations ( Layoffs ) bulk since the end of 2023, still have not completed the payment employee severance pay . 10 local textile companies have laid off 13,800 employees due to efficiency or closed factories due to decreasing demand for orders, which has resulted in unhealthy finances.

Deputy Chair of the Indonesian Textile Association (API), David Leonardi, explained that the textile and textile product (TPT) industry is currently experiencing a decline in purchases of goods due to the onslaught of imported apparel products from China, following the relaxation of imports based on Minister of Trade Regulation Number 8 of 20024.

As a result of uncompetitive prices, continued David, textile companies’ finances are experiencing bottlenecks so that they cannot offset their monthly fixed cost expenditure. “The textile industry has fixed costs every month in the form of wages, electricity, energy and others. If the textile industry doesn’t have orders, the company will automatically not be able to receive funds,” explained David to MPI when contacted, Tuesday (18/6/2024).

David continued that the lack of income funds for the company, resulted in efficiency and even factory closures were inevitable. This condition also led to mass layoffs accompanied by the inability of textile companies to pay severance pay to their employees.

“So, companies whose cash flow is no longer strong will automatically not be able to pay their employees’ severance pay,” he said.

Furthermore, David said that the onslaught of imported products which dominate the local Indonesian textile market is supported by the lack of strong government regulations in protecting the domestic textile market.

“Current market conditions are less protected by regulations, which means that many products at lower prices can enter Indonesia,” he said.

David said that based on import data in the TPT sector, the products most frequently imported were the fabric and fiber products sector and the largest was the unregistered apparel sector.