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Textile industry may face mass layoffs

28
Oct '08

The global economic turmoil and resultant slowdown in major economies of the world has started sending shivers down the spine of textile and garment sector in a majority of countries. Riding on the growth of preceding few years and anticipating growth to continue in next few years, a lot of countries had made major investments in the sector.

But now the crisis which is reaching unprecedented levels with each passing day has reached shores of Indonesia. Indonesia is among the top 5 garment exporting countries to the US and it's this market that has sent pressures shooting up.

Indonesia exported apparels worth US $2.38 billion in the first six months of 2008 to the markets of the US, a growth of just 1.37 percent corresponding to the same period of 2007. In a recent interview to fibre2fashion Mr EG Ismy, Secretary General of the Indonesian Textile Association (API) had said “Demand for Indonesian textiles and garments are still high, due to which there has been no major reduction in production.”

But now in a major turn of events in a matter of just a few days, the textile body is talking about layoffs numbering to 120,000 in the industry, next year. The industry employs around 1.2 million people and figures of expected retrenchments total to nearly 10 percent of total workforce.

But according to Indonesian labour laws, workers who are laid off are eligible to receive their salaries and absorbed back once their units start running normally. But if the problem takes a turn for the worse, there is a distinct possibility that workers could be permanently discharged, adds the association body.

However according to API, manufacturers were trying to prevent layoffs and were instead adjusting working hours and said the government should respond immediately to help the sector.

However according to statistics of the Investment Coordination Agency, the country has received 25 new investments in the textile industry in the current year.

Fibre2fashion News Desk - India

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