Indonesia Details Steps to Curb Layoffs Amid Economic Woes

The Indonesian government, in collaboration with labor unions, is actively working to prevent a wave of layoffs by implementing various mitigation strategies. Said Iqbal, Special Advisor to the President for Labor and Worker Welfare, detailed these efforts, which aim to address the threat of job losses stemming from the global economic slowdown, weakening consumer purchasing power, high industrial gas prices, and multinational companies relocating production.

Key initiatives include preventing the relocation of industries, ensuring the timely payment of severance packages, revising regulations on outsourcing, and proposing a zero percent tax rate on retirement fund benefits. Iqbal emphasized the importance of direct engagement with companies, stating that this "ground-up" approach is more effective than relying solely on reports. He has visited numerous companies across Java and is scheduled to visit Tangerang.

“

The threat of layoffs is still looming. But the government and labor unions are not standing idly by. We choose to go down to the field directly to carry out mitigation so that layoffs can be prevented. If layoffs cannot be avoided, then workers' rights must be ensured to be paid according to regulations.

These efforts have already shown some success. For instance, discussions with labor unions reportedly reduced the planned relocation of production lines from PT JAI Pasuruan and PT SAI Mojokerto, part of the Yazaki Group, from 50% to a mere three to five lines. The companies are also developing business plans through 2030 that prioritize natural workforce reduction through contract expirations rather than mass layoffs.

Furthermore, the government is pushing for lower industrial gas prices for sectors like ceramics, granite, and textiles to maintain competitiveness and retain workers. While acknowledging that some layoffs, such as the estimated 2,500 workers at PT Pakerin in Mojokerto, may be unavoidable, the government is seeking ways to use liquidation funds to pay severance and potentially provide capital for the company's relaunch.

“

The reduction in industrial gas prices is one of the government's concrete steps to prevent a wave of layoffs. With more competitive production costs, companies have room to retain their workers.