BALIKPAPAN, EAST KALIMANTAN: At least 100,000 workers in Indonesia’s biggest coal-producing province have been laid off since the start of the year as global prices for the commodity continue to fall, Jakarta Globe Report News.
Slamet Brotosiswoyo, chairman of the East Kalimantan chapter of the Indonesian Employers Association (Apindo), said on Wednesday that the majority of the layoffs involved small-scale companies operating under permits issued by district administrations.
He said that national and multinational coal miners remained largely unscathed by the drop in coal prices but could suffer if the downward trend persisted.
“Reports received by Apindo as of the end of September show that 30 percent of the total workforce employed in the coal-mining sector in East Kalimantan have been laid off, which amounts to around 100,000 people,” he said.
He added that the smaller companies were particularly hard-hit because most of them were on short-selling contracts of three to six months, while the larger companies had longer contracts and could therefore afford to wait for the coal price to level off and rise.
Last month, three small-scale miners reported more than 200 layoffs to the local office of the Manpower and Transmigration Ministry, which said it expected many more coal producers to make similar cost-cutting measures.
VPR Laxmindo laid off 54 workers, while 100 were given pink slips at SIP and 50 at Cipta Kridatama, as the declining price of coal in recent months cut into their operating budgets.
“The three companies are [a few]of more than 430 coal companies in one small district,” Panut, head of industrial relations at the Manpower Ministry office in Kutai Kertanegara district, said on Sept. 1.
He added that other companies, which he declined to identify, had suspended production because they were unable to afford to keep paying workers with the price of the coal now down by about a third from a year ago.
Slamet confirmed that the price decline was prompting more companies to temporarily halt production. “Rather than suffer losses by continuing to operate, they’re choosing to stop and wait for the price to stabilize. The big companies can still keep operating because they’ve got selling contracts of up to five years,” he said.
Slamet added that Apindo was doing its best to try to place the laid-off workers in new jobs, particularly in the palm oil industry, which is continuing to grow as more land is cleared across East Kalimantan for palm plantations.
“By the end of this year we expect an additional one million hectares of estates to have opened up, so we’re pushing the coal companies to move the workforce that they don’t need to the oil palm companies under collaborative programs in certain areas,” he said.
Ayub Sudarsono, the deputy chairman for the coal industry at the provincial chapter of the Indonesian Chamber of Commerce and Industry (Kadin), acknowledged that the price decline was a major factor in the drop in production.
He said East Kalimantan’s coal output was now 20,000 metric tons a month, down from 50,000 tons earlier in the year.
However, he was optimistic that the coal price would pick up again soon.
“There’s been a lot of layoffs and cuts in production, but the jobs will return once the price normalizes. The current situation is just temporary,” Ayub said.