March 21, 2025
JAKARTA – Labor unions have raised the alarm over layoffs across a wide range of industries in the manufacturing sector, blaming weakening spending power, supply chain problems and a lack of business competitiveness.
Data compiled by the Confederation of Indonesian Trade Unions (KSPI) and unveiled on Sunday reveal that around 60,000 workers at 50 unionized companies lost their jobs in the first two months of the year, based on reports from the union’s regional branches.
KSPI chairman Said Iqbal told The Jakarta Post on Monday that the axing was due to bankruptcy, downsizing or relocation. He said the figure could reach “as high as 150,000” in July.
The union leader mentioned “government policy factors, high excise and logistics costs” alongside “taxes that are sometimes uncertain” as some of the key factors behind the layoffs, before adding: “Don’t just blame the workers”.
Some 60,000 layoffs in just the first two months was huge, given that this was similar to the number of layoffs during all of last year, he added, citing Manpower Ministry data.
The ministry figures seen by the Post show 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 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.
Read also: Yamaha to shut piano factories in Indonesia: Union
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Said pointed out that Sanken was relocating due to “worsening productivity” as a result of outdated machinery.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 on Thursday that two more Japanese electronics manufacturers based in Bekasi, West Java, had decided to move abroad, but he did not disclose their names.
Said has scheduled a meeting with Manpower Minister Yassierli for Friday. Neither the minister nor his deputy or the ministry’s secretary-general responded to the Post’s requests for comment.
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 on Tuesday.
Indonesian Employers Association (Apindo) chairwoman Shinta Kamdani told the Post on Thursday that her organization was monitoring the recent layoffs closely.
“If we look at the matter as a whole, the challenges currently faced by labor-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 labor-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 labor-intensive industries to increase competitiveness”.
Read also: Electric equipment maker Sanken to close Cikarang factory in June
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.
“The government should have paid more attention to the manufacturing and retail sectors, which employ many workers and are important taxpayers,” Wijayanto told the Post on Thursday.