The surge of inflation and economic crisis potential in many countries significantly affect the financial sustainability of the garment and textile industry in Indonesia. The once blossoming industries in the 1990s have recently suffered global economic consequences of COVID-19. Alas, the unavoided situation propels the garment and textile industry to implement mass layoffs.
Garment and textile industry are correlated, yet the focus of each industry differs. While the garment industry focuses on manufacturing items of clothing, the textile industry focuses on producing, processing, and manufacturing of fabrics. In 2021, Indonesian textile industry became a labor-intensive industry with up to 1,4 million workers.
The Increasing Number of Layoffs
The mass layoffs in the garment and textile industry have occurred in various regions in Indonesia. The Executive Director of Indonesian Footwear Association (Aprisindo) Firman Bakrie mentioned that the amount of orders for export has, in fact, been declining since July 2022. The late gathering of data after export makes the garment and textile industry still seem to be growing when the reality proves otherwise. This is also the reason for the delayed realization of the mass layoff that is currently happening.
This phenomenon also occurs in Subang, West Java, in which the Head of Manpower Agency (Disnakertrans) of Subang Yenni Nuraeni revealed the existence of 10.000 fired workers from 25 garment factories in Subang. The spokesperson of the Textile Business Organization in Subang (PPTPJB) Sariat Arifia also stated that companies have reduced their workforce by up to 50%. Moreover, data from PPTPJB shows that the closure of 18 garment factories in West Java caused 90.000 job losses. Based on a survey by the Central Bureau of Statistics (BPS), there is a diminution of the textile industry workforce from 1,13 million to 1,08 million in August 2022.
The Cause of Mass Layoffs
The mass layoffs in the garment and textile industry is prompted by one main issue: the decreasing export demand. According to the Deputy of Apindo Workforce Division Aloysius Santoso, the demand for textile and garment products from the United States and Europe have diminished significantly by as much as 50% until mid-2023. The surging prices of basic goods drives the society to increase their savings by reducing expenditures on garment and textile products. In consequence, there has been an excessive supply of garment and textile products because the products are not fully absorbed by the market.
Furthermore, the COVID-19 related regulation to restrain cargo ships mobility also impinge the process of garment and textile products export. The regulation delayed the arrival time of garment and textile products, which lowered new demands.
The Role of the Indonesian Government
The escalating number of mass layoffs in the garment and textile industry has righteously caught the Indonesian government’s attention. Hence, the government should do in depth research and calculation before implementing the policies to prevent further layoffs. Febrio Kacaribu mentioned that the aggregate growth of the textile and garment industry is still considered well so the government has to thoroughly investigate the developing issues of mass layoffs.
Not merely affecting the garment and textile industry, this issue urges the government to implement cautious approach and policies. Vice Chairman of Indonesia Parliament (DPR) Abdul Muhaimin Iskandar reiterated the need for the government’s concern wherein the layoffs in the garment and textile industry may impact other industries as well, particularly during the economic crisis that is predicted to happen next year. He suggested concrete policies from the government to tackle the issue, such as policies to absorb garment or textiles products from SMEs. Furthermore, the Indonesian government should aim for the non-conventional export market for the domestic garment and textile industry.
