Friday, 16 January 2015


The portion of labor intensive industry in GDP was constantly contracting as investors were more inclined to use machines instead of manual ways. Benny Soetrisno, Vice Chairman of KADIN Indonesia, Labor Division stated in Jakarta on Tuesday [2/12] that today labor intensive industry in GDP constituted only 40% of total industry. This figure could even continue to contract to 30%. Benny said that automation in many industry lines was inevitable in industries where manual ways normally needed like textile, leatherwork, footwear, tobacco, and F&B. high business competition forced businesspeople to go the efficient way.

Benny rated that application of technology ensured high efficiency compared to manual ways. Automation might axe half of production cost. The raw material factor constituted around 60% of total cost. The two factors separated, there would be 40% left for electricity cost, manpower, and automation. Benny further stated that in labor intensive industry, energy saving could be half the cost but in labor intensive industry 30% - 40% would be spent on labor.

He disclosed that the Ministry of Industry set target of employing 400,000 to 500,000 workers in industry each year. Benny said that it was not impossible to meet the target provided investment was jack up. Now the ratio was : for every one percent of economy growth only 200,000 workers were employed against the previous 400,000 workers. Through January-September investment in manufacturing was Rp.148 trillion originating from domestic and foreign investment. The Coordinating Board of investment [BKPM] posted domestic investment at USD 10.1 billion.

Total investment targeted today was Rp.210 trillion and for the next year set at Rp.270 trillion, this investment increase was Government assumption basis that there would be employment of 500,000 workers next year. The Ministry of Industry set target for labor next year at 15,44 million people. Over the year the number was projected at 14,88 million people which was not easy to realize due to automation.

The same opinion was set forth by Arryanto Sagala of BPKIMI of the Ministry of Industry. According to Arryanto labor intensive industry must not be seen from the viewpoint of labor but also productivity. He showed as an example the textile industry in Vietnam posted higher productivity than Indonesia. In Vietnam the industry could produce 8 trousers per day with 44 hours per week. In Indonesia 6 trousers per day with 40 hours of working hours per week.

Under the circumstances the Ministry of industry wished to show that workers should not merely demand high wages. When company’s productivity was high, workers’ salary would be high. BPKMI noted that increase of production cost had always posed as obstacle. The cost was for labor and electricity. Arriyantio said that the labor intensive sectors. Minimum wages in Indonesia was one of the Top Three Highest in Asean. In Vietnam USD 113, Cambodia USD 80 and Indonesia USD 226 per month. (SS)

Business News - December 5, 2014

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