Government Urged to Prepare Mitigation and Solutions to Prevent Wave of Layoffs

The Federation of State-Owned Enterprise Workers Unions (FSP) BUMN Bersatu has stated that the continuing wave of layoffs (PHK) in Indonesia cannot be viewed merely as a consequence of the global economic slowdown. The rising number of layoffs is seen as an indicator of structural problems within the national economy that require immediate attention through comprehensive policy reform. Based on collected data, as of November 2025, approximately 79,302 workers had lost their jobs. Between January and May 2026, this figure increased by a further 23,470 workers. This trend demonstrates that the issue of layoffs persists and demands solutions that target the root causes. FSP BUMN Bersatu’s Daily Chair, Djusman H. Umar, expressed appreciation for the government’s establishment of a PHK Mitigation Task Force through Presidential Decree Number 10 of 2026 and its commitment to providing worker protection instruments worth approximately Rp500 trillion. However, Djusman noted that resolving the layoff problem requires more than just mitigation programmes or social assistance. He stressed the importance of addressing the economic factors that cause businesses to lose room for growth. He pointed to the crowding-out effect, where the government’s need for financing through the issuance of large amounts of Government Securities (SBN) absorbs financial market liquidity. This situation can lead financial institutions to prefer investing in government instruments rather than channelling productive credit to the business sector. As a result, financing for the industrial, manufacturing, and MSME sectors becomes increasingly limited. The impact is that companies face production cost pressures, delay investment, reduce business capacity, and ultimately resort to workforce efficiency measures. Djusman stated that layoffs are not the cause of the crisis but rather a consequence of weakening productive investment and limited financing for the real sector. He added that this issue must be understood within the context of overall economic policy. FSP BUMN Bersatu also highlighted challenges to national competitiveness. Citing the IMD World Competitiveness 2025 report, Indonesia’s ranking fell 13 places to 40th out of 69 countries. Furthermore, Indonesia’s labour productivity remains below that of several neighbouring countries in Southeast Asia. Djusman said this situation indicates the need to accelerate industrial transformation towards high-value-added manufacturing, improve workforce productivity, and enhance the investment climate. To this end, FSP BUMN Bersatu is urging the government to take a number of strategic steps, including strengthening fiscal consolidation, expanding access to productive credit for the industrial and MSME sectors, accelerating innovation-based industrial transformation, improving regulatory and bureaucratic certainty, increasing investment in vocational education and technology, and building a healthier business competition ecosystem. Djusman concluded that layoffs must be viewed as an indicator of national economic health, and that as long as productive investment has not grown strongly and industrial competitiveness has not improved, the risk of layoffs will persist. He stressed that economic reform must be directed towards creating quality and sustainable employment.