JAKARTA: As layoff figures continue to rise, the government has acknowledged that the trend is "difficult to avoid" amid mounting global economic pressures.
Nevertheless, labour unions are calling for immediate government intervention to help distressed companies stay afloat and protect jobs, while experts argue that the crisis exposes deeper structural problems that require long-term reforms to improve the business environment.
According to the Manpower Ministry's Satu Data Kemnaker platform, Indonesia recorded 32,389 layoffs in the first half of this year, with nearly one-fifth of the job losses occurring in West Java. Monthly layoffs consistently exceeded 5,000 workers during the first four months of the year.
The ministry noted that the figures cover only workers registered as participants in the Job Loss Insurance (JKP) programme, while labour unions said the actual number of layoffs is likely higher.
In response, President Prabowo Subianto established the Layoff Mitigation Task Force in May to anticipate a broader wave of job cuts, while also outlining several immediate measures to cushion the impact of layoffs.
The Confederation of Indonesian Trade Unions (KSPI) president Said Iqbal, who also serves as the President's special adviser on labour affairs, said the priority was to prevent layoffs wherever possible.
"If the company can still be saved, then it should be saved. If government policy intervention is needed, the state must step in. Businesses must be allowed to continue operating, while workers must also be protected from layoffs," Said Iqbal said in a press release on Wednesday, following reports of potential layoffs at two garment and textile manufacturers in Central Java that could affect nearly 1,500 workers.
Before companies resort to mass layoffs, the government and labour unions plan to explore alternatives, including shorter working hours, operational cost efficiencies agreed with unions, policy interventions to address energy and raw material costs, and temporary furloughs where feasible.
Deputy Manpower Minister Afriansyah Noor acknowledged that layoffs remain difficult to avoid amid global economic pressures but said companies are still required to fulfil workers' legal rights.
The ministry is also preparing reskilling programmes for affected workers, with around 50,000 training places available this year.
"It's not only Indonesia. Other countries, including China and even the United States, are experiencing similar challenges," Afriansyah said in Jakarta on Thursday, as quoted by Kompas, noting that the government was seeking to strike a balance between protecting workers and ensuring business continuity to maintain a conducive investment climate.
Finance Minister Purbaya Yudhi Sadewa, however, argued that layoffs should be viewed within the broader context of the labour market, saying business closures and layoffs are a normal feature of a competitive economy. He stressed that the more important indicator is whether new jobs continue to outpace job losses.
"We will continue monitoring the situation. That's why the government is rolling out various economic stimulus measures to help the economy grow faster. If economic growth slows, layoffs will outnumber the creation of new companies and new jobs," he said on Tuesday, as quoted by Kompas.com.
Deni Friawan, a researcher at the Center for Strategic and International Studies (CSIS), said while rapid intervention was necessary to prevent companies from collapsing, sustainable layoff prevention depended on creating a more predictable and competitive business environment.
"Preventing layoffs sustainably requires policies that work together to create a conducive business environment," Deni told The Jakarta Post on Friday.
With labour-intensive industries grappling with weaker demand, rising energy costs and raw material constraints, Deni said the government should pursue a multi-layered strategy.
In the short term, authorities should ensure the newly established Layoff Mitigation Task Force responds quickly to companies in financial distress.
Over the next three to 12 months, the government should also resolve long-standing bottlenecks faced by industries before they further erode competitiveness.
Looking further ahead, Deni called for an early warning system that actively monitors falling industrial utilisation, weakening export orders and delayed investment rather than waiting for companies to report problems after layoffs become unavoidable.
He also urged the government to conduct regular cross-ministerial reviews of regulations to assess their cumulative impact on industrial competitiveness, warning that individually well-intentioned policies, including local content requirements (TKDN), downstream processing and trade regulations, could collectively raise production costs, delay access to raw materials and create uncertainty for businesses.
Deni added that Indonesia could also consider establishing an independent body, similar to productivity commissions in countries such as Australia, to regularly evaluate how government policies affect industrial competitiveness and investment decisions.
"The primary objective should not only be preventing layoffs but restoring confidence that Indonesia remains an attractive place to invest and expand," he said, adding that the success of government policy should ultimately be measured by whether companies choose to reinvest, expand capacity and hire more workers, rather than simply by the number of layoffs prevented. - Jakarta Post/ANN
