Analysts say these job losses arise from the government’s failure to protect domestic industries from foreign competition. -- PHOTO: AFP
JAKARTA (The Straits Times/ANN): The upcoming Lebaran, or Hari Raya Aidilfitri, celebrations will be less than festive for Mr Sriyono, 52, who, like many Indonesians, has a name with only one word.
He is one of the more than 10,000 workers at textile manufacturer PT Sri Rejeki Isman, popularly known as Sritex, who lost their jobs on Feb 26 after the company lost its court appeal against bankruptcy.
“I still can’t believe this... I didn’t change companies because it feels like family here. I feel so sad, I am speechless,” he told The Straits Times over the phone. He had worked at the company’s factory in Solo, Central Java, for 33 years, serving refreshments to foreign buyers who visited the plant.
The closure of Sritex, once South-east Asia’s largest textile manufacturer, comes after a wave of shutdowns in at least 60 other textile and garment manufacturers across Indonesia between January 2023 and December 2024, according to the Indonesian Fiber and Filament Yarn Producers Association.
It also follows closures of other large manufacturing companies in Indonesia in early 2025 – such as piano-maker Yamaha Music, Sanken Electronic, which produces electric components, and Danbi International, which produces fake eyelashes – that have resulted in thousands of job losses.
Some 60,000 workers from 50 companies lost their jobs in January and February, according to the Indonesian Trade Union Confederation in a media statement on March 15.
And more layoffs are in store for the year. Indonesia’s Centre for Research at the Parliamentary Expertise Agency estimates that 280,000 workers will be laid off in 2025, making it the highest annual number since the Covid-19 pandemic, which saw 3.6 million people lose their jobs in 2020.
This estimate translates into an unemployment rate of 5.2 per cent of the country’s total working population, said Dr Muhammad Hanri, an economist at the University of Indonesia in Jakarta.
Analysts told ST that these job losses arise from the government’s failure to protect domestic industries from foreign competition.
Mr Bhima Yudhistira, executive director of the Centre of Economic and Law Studies think-tank, said: “The government is busier attracting new investments rather than maintaining existing industries.”
He noted that recent moves to ease import rules and provide tax incentives have opened the doors to cheaper Chinese goods, particularly textile products.
Economists are also concerned that the layoffs come amid Indonesia’s first recorded deflation in over 20 years. In early March, the Central Bureau of Statistics, or BPS, announced that the consumer price index fell 0.09 per cent year on year in February, marking the first annual deflation since March 2000.
BPS chief Amalia Adininggar Widyasanti said at a press conference: “This (deflation) was not due to weaker purchasing power, but because of the discounted electricity tariffs (in January and February).”
However, Dr Jahen Fachrul Rezki, an economist at the Institute for Economic and Social Research at the University of Indonesia, said deflation could be a warning sign for Indonesia’s economy. “Ongoing deflation needs to be anticipated, as it reflects a decline in consumption and investment from both people and businesses,” he told ST.
Indonesia posted economic growth of 5.03 per cent for 2024, and is expected to post 5 per cent growth for 2025. This is still below the ambitious target of 8 per cent growth set by President Prabowo Subianto in his first term in office.
In December 2024, his government unveiled stimulus measures including 445.5 trillion rupiah (S$36 billion) for social assistance initiatives for low- and middle-income Indonesians, tax breaks and industry incentives.
More recently, the government announced special discounts for the Ramadan fasting month and Hari Raya holidays, including lower-priced flight tickets, reduced toll fees and shopping rebates. It also earmarked 50 trillion rupiah for religious holiday allowances to be paid to three million civil servants, aimed at boosting purchasing power.
These populist measures come amid growing worries over a weakening economy and slowing consumption in South-East Asia’s biggest economy.
Dr Jahen said the government needs to build credibility in implementing its policies. “To address deflation, the government must strengthen purchasing power and create quality jobs – not just increase job numbers – among other measures,” he added.
The Indonesian government has said that the wave of layoffs is under control and that the manufacturing industry is still showing signs of growth. At a press conference on March 5, Indonesia’s Minister of Manpower, Professor Yassierli, said Sritex workers would receive some financial aid.
However, such aid may not come soon enough for Mr Sriyono and his family of three, as he tries to stretch his last pay cheque of 2.3 million rupiah for the Lebaran festivities, which mark the end of the Muslim fasting month, at the end of March, and beyond.
“It is already our tradition to celebrate Lebaran; after all, it is only once a year. But we also have to save money. We need to make sure that the last salary we have will last till after Hari Raya,” he said. - The Straits Times/ANN
