Employers call on Indonesian government to stem layoffs, boost competitiveness

The Star

5 days ago

Workers are pictured on July 17 at a factory of fabric and garment producer PT Sari Warna Asli in Surakarta, Central Java. - Photo: Antara
JAKARTA: Employers have called on the government to ramp up support for domestic firms to stay afloat and remain competitive, as widespread layoffs reflect investor concerns over an uncertain economic outlook.
At least half of all businesses nationwide have carried out layoffs so far this year, according to a new report from the Indonesian Employers Association (Apindo), which warned that the figure could grow further through the end of 2025.
'We all agree that these layoffs are not isolated incidents. They are real, ongoing and will continue to unfold,' Apindo chairwoman Shinta Kamdani told a press briefing on Tuesday (July 29) at the lobby group's headquarters in Jakarta.
Apindo will hold its 34th national working and consultation meeting in Bandung, West Java, from Aug 4–6 to address business challenges amid a weak domestic economy, policy uncertainty and external pressures.
'This is no longer a seasonal phenomenon. It has become a serious structural issue that requires comprehensive attention,' she continued.
Citing data from the Workers Social Security Agency (BPJS Ketenagakerjaan), Shinta said roughly 150,000 workers had been laid off from January through June of this year, and more than 100,000 of them had already filed for benefits.
While the government has its own layoff monitoring system via regional manpower agencies, she emphasized that an overall upward trend was undeniable.
The number of layoffs rose 32.1 percent in the first half of 2025 from a year earlier, with 42,385 workers terminated in the six months from January to June, up from 32,064 in the corresponding period of 2024, according to figures published on the government's Satu Data portal.
While the Manpower Ministry's figures do not present a complete picture of hiring and firing in the country, where the informal sector contributes a large part to national economic activity, they are watched as indicators of employment trends in various industries.
'This isn't just about numbers. […] When our [United States-imposed tariff] rate is not better than [that imposed on] competitors and orders shift elsewhere, it will hurt our labor force even more,' Shinta said.
She was referring to the 19 percent 'reciprocal' duty imposed by US President Donald Trump on Indonesian goods shipped to the US.
The rate, which was agreed upon with President Prabowo Subianto, was lowered from the earlier-threatened 32 percent in exchange for extensive concessions from Jakarta.
'This is an example of efforts being made to minimise the ongoing layoffs. Looking ahead, with the current state of the economy, it seems layoffs will continue,' she added.
To help companies preserve cash flow, maintain production levels and avoid further layoffs, Apindo proposed a set of fiscal incentives.
These include a value-added tax (VAT) exemption on subcontracting services and raw materials, faster processing of VAT refunds, lower import duties on industrial inputs and the expansion of employee income tax waivers.
The business group also called for broader access to competitive financing, such as lower-interest credit lines, as well as stimulus measures aimed at reducing operational costs.
These include a labour stimulus through Health Care and Social Security Agency (BPJS Kesehatan) subsidies, energy cost relief through discounts on electricity and gas prices and incentives for installing solar panels using net-metering schemes. - The Jakarta Post/ANN