Job losses stem from weakening exports, rising costs, soaring gas prices, an influx of imported products, and uncertainty in the global economy. The central government is preparing mitigation measures. Observers and experts are calling for collaboration between the government, employers, and trade unions to safeguard sustainability.
Jakarta (AsiaNews) – The threat of mass layoffs looms high amid economic pressures across various industries as midyear approaches, with trade unions warning that more than 50,000 people could lose their jobs.
A combination of factors is behind the expected wave of layoffs, including weaker exports, rising production costs, soaring fuel prices, imports, and growing uncertainty in the global economy.
The most vulnerable sectors include textiles and apparel, footwear, electronics, automotive components, ceramics, and other labour-intensive manufacturing sectors.
Unions have already targeted several companies due to the risk of operational shutdowns and staff redundancies.
Confederation of All Indonesian Trade Unions President Andi Gani Nena Wea warned that a major ceramics factory in Bekasi, West Java, may soon implement layoffs due to soaring industrial gas prices. Higher expenses have increased operating costs.
Meanwhile, Indonesian Trade Union Confederation (KSPI) President Said Iqbal adds that several industrial sectors are facing rising pressures from weaker exports, rising costs of imported raw materials, fluctuations in the rupiah-US dollar exchange rate, and broader global economic uncertainty.
Export-oriented industries, such as footwear and apparel, are among the hardest hit, along with companies that rely heavily on imported raw materials, this according to Said.
“Uncertainty in global oil prices and geopolitical tensions are significantly affecting production activities, especially among export-oriented companies,” the KSPI leader explained at a joint press conference held by the trade union and the Labour Party.
One of the companies singled out is PT Pakerin in Mojokerto, West Java province, a paper manufacturer that is reportedly facing the possibility of laying off around 2,500 workers.
Most of the company’s activities, Said explained, have already been halted, with only a small portion of its facilities still operating.
Another company under close monitoring is PT Feng Tay in Bandung Regency, also in West Java.
With a workforce of between 14,000 and 17,000 workers, the company reportedly laid off some 4,000 because of the uncertainty over future orders following the completion of a major footwear production contract.
In East Java, similar concerns affect two automotive component manufacturers located in Pasuruan and Mojokerto. Thousands of workers across various sectors could be affected, as Japanese principals are considering relocating part of the manufacturing to other countries, including Vietnam, as part of the industry’s transition to electric vehicles.
In response to the growing threat of layoffs, the Indonesian government, through the Ministry of Manpower and the House of Representatives (DPR), is preparing several mitigation measures aimed at minimising the impact on affected workers and communities.
Initiatives under discussion include expanding labour-intensive employment programmes, streamlining the Job Loss Insurance (JKP) scheme, and increasing coordination with regional governments, unions, and business stakeholders.
The unions are also urging the government to boost controls on illegal imports and ensure that companies fulfil their obligations regarding severance pay and other workers’ rights, in accordance with applicable labour regulations.
The prospect of mass layoffs has become one of Indonesia’s most pressing labour challenges for the second half of 2026.
Observers and experts argue that close collaboration between the government, employers, and labour organisations will be crucial to safeguarding industrial sustainability while protecting workers’ livelihoods and rights.