ANN/THE JAKARTA POST – Labour unions have raised concerns over widespread layoffs in Indonesia’s manufacturing sector, attributing the job losses to weakening consumer spending, supply chain disruptions and declining business competitiveness.
Data released by the Confederation of Indonesian Trade Unions (KSPI) showed that approximately 60,000 workers from 50 unionised companies were laid off in the first two months of the year, based on reports from regional union branches.
KSPI chairman Said Iqbal told The Jakarta Post that the layoffs stemmed from bankruptcies, downsizing, and business relocations. He warned that the total number of job losses could surge to 150,000 by July.
Iqbal pointed to “government policy factors, high excise and logistics costs”, and “uncertain tax regulations” as contributing to the crisis, cautioning against placing sole blame on workers.
The scale of layoffs in early 2024 is particularly alarming, he noted, as it nearly matches the total number recorded throughout the previous year. Citing Manpower Ministry data, he said that 77,965 workers were laid off in 2024, up from 64,855 in 2023 and 25,114 in 2022.
With job losses mounting, labour unions are urging the government to take action to stabilise the manufacturing sector and protect workers’ livelihoods.
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 has been bleeding since at least mid-2023 as it has failed to compete with foreign producers, partly due to obsolete machinery.
However, Said pointed out that the list comprised not only 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 close its Cikarang, West Java, factory.
Said pointed out that Sanken was relocating due to “worsening productivity” as a result of outdated machinery.
Separately, Said revealed that two more Japanese electronics manufacturers based in Bekasi, West Java, had decided to move abroad, but he did not disclose their names.
Industry Ministry spokesman Febri Hendri Antoni Arief came forward with data showing that Indonesia had created about 1.1 million jobs in 2024, far above that year’s layoff figure.
“(Companies are) not just closing (operations), many domestic industries have also opened new factories, which, of course, absorb more workers,” Febri told the Post. Indonesian Employers Association (Apindo) chairwoman Shinta Kamdani told the Post that her organisation was monitoring the recent layoffs closely.
“If we look at the matter as a whole, the challenges currently faced by labour-intensive industries are rather complex and structural in nature. This wave of pressure has been building since the pandemic and is ongoing due to several factors, both on the supply and the demand side,” said Shinta.
From the supply side, businesses have been facing high production costs due to the minimum wage increase, high logistics costs, higher raw material prices, higher costs of financing and permits, as well as extortion that brought about unforeseen expenses, explained Shinta.
From the demand side, weakening consumer spending power had taken a toll on domestic sales while global economic uncertainty saw export orders dwindle.
“On top of that, the manufacturing industry is also facing competition from finished goods and illegal imports, which erode domestic product absorption,” said Shinta.
She recommended that the government deregulate industries, provide legal certainty for labour-intensive investment, ensure minimum wages were in line with the real economic conditions and unleash more incentives.
Shinta said Apindo’s recommendations had been delivered to the government via discussion forums and audiences and claimed that the government was preparing “strategic steps, including deregulation in labour-intensive industries to increase competitiveness”.
Paramadina University economist Wijayanto Samirin said a “weakening business climate” prompted by “uncontrollable extortion”, smuggling and ever-changing government policies were key factors behind the high number of layoffs.
