Nearly 200 Krakatau Osaka Steel Workers Face Layoffs, Here's the Culprit
The national steel industry is facing heavy pressure amid sluggish domestic demand and an influx of cheap imported products. In this context, Said Iqbal, President of the Indonesian Confederation of Trade Unions (KSPI) and the Labour Party, revealed the latest developments in the wave of layoffs at PT Krakatau Osaka Steel (KOS).
Said Iqbal stated that the number of workers affected by layoffs continues to rise, now approaching 200 from the previous figure of 161 workers.
“Layoffs at Krakatau Osaka Steel: the Labour Party together with KSPI has established the Orange Post. There are 161 people laid off, but it has increased, now approaching 200 people,” said Said Iqbal to reporters when met at the Ministry of Manpower office, Jakarta, on Thursday (7/5/2026).
According to him, one of the main causes of the pressure on the steel company stems from the slowdown in major government projects, including the Nusantara Capital (IKN) project and toll road developments, which have been the main markets for PT KOS.
“The cause is that previously, PT KOS’s consumers were IKN. The IKN project and toll road projects. Because they have slowed down and tend to stop, steel demand has decreased. Therefore, rationalisation is inevitable, and it might even close,” he said.
Amid the layoff process, Iqbal mentioned that negotiations are currently ongoing between management and workers regarding the rights of affected employees.
“Negotiations are in process. Indeed, management will provide around twice the regulation to give severance to the laid-off workers,” he stated.
In addition to weakening domestic demand, Iqbal also highlighted the intense competition with imported steel products from China, which are considered difficult to compete with in terms of price.
“Because PT KOS products cannot compete in price with imported steel goods from China, which are substandard—we call them substandard, so they are cheaper in value, with substandard measurements. Therefore, they cannot compete either, that’s correct,” said Said Iqbal.
It should be noted that PT Krakatau Osaka Steel (KOS) has even stopped production at the end of April 2026 and is scheduled to close all operations in June 2026. Spokesperson for the Ministry of Industry, Febri Hendri Antoni Arief, stated that the government understands the social and economic impacts of this decision, particularly for the workers.
“We are saddened by the situation faced by the workers of PT Krakatau Osaka Steel. The government understands that this decision has significant social and economic impacts. Therefore, we urge the company to fulfil the rights of affected workers in accordance with applicable laws and regulations,” said Febri in his statement on Tuesday (5/5/2026).
The decision to halt operations was made at the beginning of the year through a board meeting on 23 January 2026. The company has been experiencing financial pressure since 2022 due to the weakening domestic construction steel market and the flood of cheap steel imports.
The Ministry of Industry assesses that this situation puts local producers in a difficult position as they must maintain product quality amid price pressures from cheaper imported steel.
“In addition to limited product diversification, declining demand and pressure from cheap steel imports, global oversupply conditions also affect the company’s competitiveness,” he said.