Apindo: Majority of Companies Not Interested in Hiring New Employees
The Indonesian Employers’ Association (Apindo) states that the majority of companies in Indonesia do not plan to add new workers in the near future. Based on Apindo’s internal survey, around 50% of companies even stated that they will not expand in the next five years.
“Then 67% of those companies are not interested in recruiting new employees,” said Apindo’s Head of Labour Affairs, Bob Azam, during a hearing at Commission IX of the House of Representatives on Tuesday, 14 April 2026.
According to Bob, this situation is inseparable from the sluggish investment climate, particularly in labour-intensive sectors. He assessed that the current investment trend is shifting away from the manufacturing sector, which has traditionally absorbed large numbers of workers.
Therefore, he emphasised the importance of encouraging investments that are not only capital-intensive but also capable of creating jobs on a massive scale. The need for labour-intensive investment, he continued, aligns with Indonesia’s current workforce structure, which is dominated by lower to middle-level workers, who are generally absorbed in the manufacturing sector.
On that occasion, Bob also requested that revisions to labour regulations accommodate workers’ interests while still considering the investment climate.
“We want the law to protect labourers, but the protection should not cause investments to not enter. Thus, those who actually need jobs do not get the opportunities as expected,” he said.
Apindo’s findings align with statements from the Indonesian Chamber of Commerce and Industry (Kadin). Vice Chairman of Kadin for Labour Affairs, Subchan Gatot, said that the current sluggish absorption of workers does not reflect the annual economic growth of 5.39%.
According to him, the current labour market faces considerable structural pressures. The unemployment rate still reaches 7.35 million people, while around 57.7% of the workforce is employed in the informal sector with relatively low productivity.
Around 32% of workers are recorded as not working full-time. This condition shows that although there is economic activity, the quality and capacity of worker absorption is still limited.
Subchan said that the weak absorption of workers is inseparable from challenges in the industrial sector, especially labour-intensive industries. Economic growth, he said, has not been able to optimally drive expansion in this sector.
On the other hand, he said there is a trend of industrial relocation to other countries due to rising production costs and supply chain disruptions. Although nominally Indonesia’s wage levels are considered competitive, the overall labour cost structure is less attractive to investors.
One of the main factors is the high severance obligation. Kadin noted that severance in Indonesia can reach up to 19 months’ salary, far higher than Vietnam’s around 5 months for 10 years of service. Even, the cost of termination of employment (PHK) in Indonesia is 240% higher than in competing countries.
Subchan said this disparity encourages companies to relocate investments to countries with more efficient cost structures, such as Vietnam and Cambodia.
In addition, another issue lies in the mismatch between the minimum wage and the real capacity of the industry. Indonesia’s minimum wage is recorded at around US$334.60, higher than Vietnam’s US$204. However, the average affordability of the manufacturing sector in Indonesia is only around US$188.31.
In contrast, in Vietnam, the average real wage is above the minimum wage, around US$342. This condition makes many labour-intensive companies in Indonesia struggle to meet minimum wage requirements. “Most minimum wages indeed cannot be met by labour-intensive companies,” he said.
Previously, Investment Minister Rosan Roeslani was optimistic that investment realisation is estimated to reach Rp 479 trillion or grow around 7% annually in the first quarter of 2026.
Rosan said that the government is currently intensively promoting investment, one of which is through President Prabowo Subianto’s overseas visits. He claimed this step could strengthen investor confidence to invest in Indonesia.
In various international forums, he said, the president is actively offering investment opportunities while assuring global business players of Indonesia’s economic prospects. “This helps give them confidence that the government understands the dynamics of global geopolitics and economy, so investments can enter and develop,” said Rosan.