Indonesia is currently experiencing a wave of mass layoffs. Data released by the Ministry of Manpower indicates that 101,536 workers were laid off across the country from January to June.
These phenomena include 217 workers from 37 companies in Sleman Regency, Yogyakarta. The number of workers affected by layoffs is expected to continue rising until the end of 2024.
This situation is ironic, considering that labor plays a crucial role in various types and levels of production activities within companies. Moreover, a country’s welfare and economic status can be assessed based on its labor force.
Dr. Hempri Suyatna, an expert in people’s economy and a lecturer in the Department of Social Development and Welfare at UGM’s Faculty of Social and Political Sciences (Fispol UGM), stated that the high number of layoffs is due to several factors, including the impact of sluggish global economic growth on labor-intensive industries.
“I think many factors contribute to this wave of layoffs, particularly in labor-intensive export-oriented sectors such as the garment or textile industry,” Dr. Suyatna said in an interview on Wednesday (Aug. 7).
In addition, Dr. Suyatna noted that the influx of illegally imported products and the decline in public purchasing power due to the devaluation of the rupiah also contributed to the wave of layoffs.
Furthermore, the ongoing political transition in Indonesia is causing many companies to adopt a wait-and-see approach regarding political developments, which also has an impact. Dr. Suyatna suggested that several measures should be anticipated to prevent the wave of layoffs from having a more significant effect.
As the fourth-most populous country in the world, Indonesia is expected to benefit from a demographic dividend in 2030. To maintain national stability, it must quickly find solutions to the increasing number of unemployed people.
First, the Ministry of Trade Regulation No. 8 of 2024 on Import Policies and Regulations should be reevaluated, as this regulation is suspected of causing the influx of imported products, which negatively impacts domestic industries.
“If necessary, the regulation should be revised to protect domestic products from the flood of imported goods,” Dr. Suyatna suggested.
Second, public purchasing power needs to increase, for example, by ensuring price stability so that goods remain affordable.
“This can be achieved through social assistance programs for underprivileged families, enabling them to purchase these products,” he added.
Dr. Suyatna further emphasized the need for additional measures to anticipate the impact on those affected by layoffs, such as implementing labor-intensive programs involving local communities. This includes strengthening the Micro, Small, and Medium Enterprises (MSME) or Creative Industry sectors.
“The MSME sector has consistently proven to be a safety valve for the national economy. Strengthening the MSME sector is one solution for those affected by layoffs,” Dr. Suyatna concluded.
Author: Triya Andriyani
Editor: Gusti Grehenson
Image: Freepik
Post-editor: Afif