Jakarta. Investment Minister Bahlil Lahadalia identified two main factors driving layoffs in West Java. Firstly, Bahlil pointed out that many factories are relocating from West Java to Central Java, leading to significant job losses. Secondly, some factories are shutting down permanently due to their inability to compete, primarily due to outdated machinery and high operational costs compared to other countries.

"The issue stems from productivity problems. Therefore, we encourage both the protection of workers' rights and the need for workers to consider the sustainability of their companies," Bahlil told reporters in his office on Monday.

Despite the shutdowns, Bahlil noted that new factories are also opening. "But don't be disheartened; as some leave, others arrive. For instance, we recently inaugurated a shoe factory in the integrated industrial zone of Batang, Central Java, which has created over 2,000 jobs," he explained.

Bahlil emphasized that attracting investors requires concerted efforts from both the government and other stakeholders. The government can offer tax incentives, while banks can facilitate financing for machinery upgrades. "There must be cooperation with workers. Provide them with decent wages, but workers must also understand that if industries don’t operate, how can factories survive?" he added.

According to the Confederation of Indonesian Workers (KSPN), hundreds of workers remain at risk of layoffs. KSPN President Ristadi reported that around 750 workers from four companies had already been laid off, and another 500 workers are at risk of being terminated in August 2024. Ristadi noted that they will continue to validate these figures.

"Many factories are laying off workers because their contracts have expired and there are no new orders," Ristadi said on Saturday. The affected companies are located in West Java and Central Java.

Previously, KSPN recorded nearly 50,000 layoffs in the textile and textile products (TPT) industry from January 2024 to early June. However, many companies prefer not to disclose this information for fear of affecting their banking relationships and buyer trust.

The highest number of layoffs has been reported in West Java and Central Java, where the largest concentration of the textile industry is located. "This is because West Java and Banten are central to the textile industry's largest operations," Ristadi concluded.