Layoffs Reflect Structural Economic Problems, Says Labour Federation
The Federation of State-Owned Enterprise Workers (FSP BUMN Bersatu) has stated that the ongoing wave of layoffs in Indonesia cannot be viewed solely as an impact of the global economic slowdown. The rising number of layoffs is considered an indicator of structural problems within the national economy that need to be addressed immediately through comprehensive policy reform.
Based on collected data, approximately 79,302 workers lost their jobs up to November 2025. Meanwhile, from January to May 2026, the number increased by a further 23,470 workers. This trend shows that the layoff problem is continuing and requires solutions that target the root causes.
FSP BUMN Bersatu Chairman Djusman H. Umar appreciated the government’s move to form a Layoff Mitigation Task Force through Presidential Decree Number 10 of 2026, as well as the commitment to provide worker protection instruments worth around IDR 500 trillion.
"The government’s steps show the state’s presence in protecting workers. However, solving the layoff problem is not enough through mitigation programmes or social assistance alone. What is more important is fixing the economic factors that cause the business world to lose room to grow," Djusman said in a statement on Friday, 3 July 2026.
According to him, one factor that needs attention is the crowding out phenomenon, where the government’s financing needs through the issuance of Government Securities (SBN) in large amounts absorb financial market liquidity. This condition potentially makes financial institutions prefer to invest 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. Consequently, companies face production cost pressures, delay investments, reduce business capacity, and ultimately resort to workforce efficiency.
"Layoffs are not the cause of the crisis, but rather a consequence of weakening productive investment and limited financing for the real sector. Therefore, this problem must be read in the context of overall economic policy," Djusman stated.
FSP BUMN Bersatu also highlighted national competitiveness challenges. Referring to the IMD World Competitiveness 2025 report, Indonesia’s ranking fell 13 places to 40th out of 69 countries. Additionally, Indonesian labour productivity remains below that of several neighbouring countries in Southeast Asia.