CORE Predicts Increased Risk of Job Losses in Q2 2026 Amid Global Pressures

Jakarta – The Centre of Reform on Economics (CORE) Indonesia has warned that the risk of layoffs could rise in the second quarter of 2026 due to global pressures beginning to affect the domestic manufacturing sector. In its latest report, quoted in Jakarta on Wednesday 20 May 2026, CORE cited the conflict in Iran, which disrupts shipping routes through the Hormuz Strait, as having disrupted the global supply side.

For Indonesia, where the manufacturing industry still relies on imported raw materials, the disruption is pushing up production operating costs.

‘The pressure on the labour market stems from two more structural factors: the pass-through of cost shocks from global conflicts to the business world and Indonesia’s industry’s dependence on imported raw materials,’ CORE wrote in its report.

As costs rise, pressures are being felt by businesses and could weigh on employment absorption.

Evidence of this is reflected in the S&P Global PMI survey for April 2026, which shows a decline in employment absorption in the manufacturing sector.

The PMI in April 2026 fell to 49.1, entering contraction territory, after previously reaching 53.8 in February 2026.

In this context, CORE estimated that cost pressures could lead to increased layoffs in the near term.

Based on a 2020 input-output table simulated by the Badan Pusat Statistik (BPS), the additional layoffs are estimated at between 15,300 and 20,300 workers.

The layoffs are expected to be concentrated in industrial agglomeration areas, such as the electronics sector in Batam, textiles and ready-made garments in West Java, chemicals and pharmaceuticals in East Java, and the footwear industry in Banten.