Mass layoffs have become a major issue across society. Government policies and the decline in public purchasing power resulting from the economic strain since the COVID-19 pandemic are cited as the primary factors behind these layoffs in Indonesia.
The impact is felt by workers who have lost their livelihoods, particularly those who are the primary breadwinners for their families.
Recently, PT Sri Isman Rejeki (Sritex) officially ceased operations on Mar. 1, 2025, following a bankruptcy ruling, resulting in the layoffs of approximately 10,000 workers.
Prior to this, Yamaha Music Product Asia also shut down two factories, resulting in 1,100 layoffs.
A labor expert from Universitas Gadjah Mada (UGM), Professor Tadjuddin Noer Effendi, pointed out that the initial cause of the layoffs at Sritex was the issuance of Trade Minister Regulation No. 8 of 2024, which removed the technical approval requirements for imported finished goods, including textiles.
“As a result of this regulation, textile imports to Indonesia surged from 136,360 tons in April 2024 to 194,870 tons in May 2024. This led to local textile products being unable to compete with cheaper imported goods,” he explained on Tuesday, Mar. 4, 2025.
The flood of cheap imported textiles has not only hurt the Micro, Small, and Medium Enterprises (MSMEs) sector but has also impacted large factories.
Several prominent textile factories, such as PT Sritex, were forced to close and conduct mass layoffs due to a significant decline in market demand.
This situation was exacerbated by the ongoing decline in public purchasing power, particularly among the lower-middle class, which has yet to fully recover since the pandemic.
Moreover, Professor Effendi projected that laid-off workers might turn to the informal sector, such as trading and selling food.
This is already evident in various cities, including Yogyakarta, where many people have transitioned to informal jobs to make a living.
However, it should be noted that jobs in the informal sector can only meet short-term needs.
“Without government intervention, the unemployment rate could rise in the future,” he warned.
Professor Effendi also criticized the government’s efforts to address the layoff crisis, describing them as inadequate and inconsistent.
He mentioned that the government has been slow to respond to this wave, particularly in the textile sector.
This has led to uncertainty and anxiety that, if not addressed quickly, unemployment, poverty, and even crime could increase.
“Despite statements from the deputy minister about efforts to prevent layoffs, the reality is that many workers have already been laid off without any concrete action from the government,” he remarked.
According to him, if the government does not immediately provide social assistance, the welfare of workers affected by the layoffs will deteriorate rapidly.
Social assistance, such as job loss insurance, retirement benefits, and other welfare programs, must be promptly implemented to prevent a decline in well-being.
“The government must create job opportunities by investing heavily in labor-intensive sectors like the textile and garment industries. This way, more job opportunities will become available,” Professor Effendi concluded.
Author: Lintang
Editor: Gusti Grehenson
Post-editor: Lintang
Photographs: Sritex and Antara