Laid off workers: Help Mr Minister (Labour Minister Yassierli dressed in clown suit in back of car)
According to the Labour Ministry, some 60,000 workers from around 50 companies were laid off (PHK) across a wide range of industries in the manufacturing sector in the first two months of 2025. Trade unions are warning that this figure could rise to as high as 150,000 by July.
They also noted this many layoffs in just the first two months of the year is extremely worrying given that it is almost as high as all the layoff that occurred last year. According to ministry figures quoted by the Jakarta Post, there were 77,965 layoffs for all of 2024, up from 64,855 in 2023 and 25,114 workers in 2022.
Out of the 50 companies, two textile manufacturers, PT Karyamitra Budisentosa and PT Sri Rejeki Isman, better known as Sritex and whose bankruptcy became a national issue recently, were responsible for about 10,000 layoffs each.
The list also includes PT Adis Dimension Footwear and PT Victory Chingluh Indonesia, two local manufacturers for Nike and other global footwear brands. The two manufacturers based in Tangerang, Banten, downsized by a combined total of 3,500 workers.
The textile industry in particular has been in decline since at least mid-2023 due to its failure to compete with foreign producers, partly due to obsolete machinery and low productivity.
Deputy Labour Minister Immanuel Ebenezer Gerungan has warned that job cuts in the textile sector this year could surge potentially increasing to 280,000 workers, adding that 60 textile companies are already planning layoffs that could affect up to 200,000 employees.
Trade unions also blame factors such as high excises, logistics costs and an unpredictable tax regime saying that the government needs to stop just blaming workers.
They point out that the affected companies not only comprise textile and footwear producers, but also "capital-intensive" ones, such as two Yamaha-owned piano factories in Greater Jakarta that are in the process of shutting down on the back of falling market demand.
PT Sanken Indonesia, a subsidiary of Japan-based electronic equipment manufacturer Sanken Electric Co. Ltd., recently announced its decision to relocate its factory in Cikarang, West Java, due to "worsening productivity" as a result of outdated machinery.
While employers have been quick to blame the 2024 annual wage increases for the layoffs (despite wages stagnating or falling behind inflation over the last five year), the Indonesian Employers Association (Apindo) concedes that Indonesian businesses are facing high production costs due to high logistics costs, higher raw material prices, higher costs of financing and permits, ever-changing government policies as well as extortion and bribery that bring about unforeseen expenses.
From the demand side, weakening consumer spending power had taken a toll on domestic sales while global economic uncertainty saw export orders dwindle.
