Said Iqbal Details Government Measures to Curb Layoffs

Presidential Special Adviser on Employment and Labour Welfare, Said Iqbal, has detailed a number of mitigation measures being undertaken by the government together with labour unions to suppress a wave of redundancies (PHK). The mitigation steps include preventing industrial relocation, ensuring the payment of severance, revising regulations on outsourced workers, and proposing a zero per cent tax rate on Old Age Security (JHT) benefits. Iqbal stated that the threat of redundancies still looms over the industrial sector due to the global economic slowdown, weakening public purchasing power, high industrial gas prices, and the relocation of multinational company production to other countries. “The threat of redundancies is indeed still before our eyes. But the government and labour unions are not standing idly by. We choose to go directly into the field to carry out mitigation so that redundancies can be prevented. Even if redundancies cannot be avoided, workers’ rights must be ensured to be paid in accordance with the provisions,” Iqbal said in a written statement on Sunday (28/6). He stated that a direct approach to companies, or going down to the field, is considered more effective than merely receiving reports. In recent weeks, he claimed to have visited a number of companies in West Java, East Java, and DKI Jakarta. On Monday (29/6), he is scheduled to visit Tangerang Regency. According to Iqbal, one result of these measures is the reduction of production relocation plans at PT JAI Pasuruan and PT SAI Mojokerto, which are part of the Yazaki Group. Initially, the company planned to move about 50 per cent of its production lines to Vietnam, but after dialogue with the labour union, the relocation reportedly shrank to about three to five production lines. He said the company has also prepared a business plan up to 2030 that prioritises natural workforce reduction through the expiry of employment contracts, rather than mass redundancies. In addition, the government is also pushing for a reduction in non-subsidised industrial gas prices for the ceramics, granite, and textile sectors so that companies remain competitive and able to retain their workforce. “Reducing industrial gas prices is one of the government’s concrete steps to prevent a wave of redundancies. With more competitive production costs, companies have room to retain their workers,” Iqbal said. For the case of PT Pakerin in Mojokerto, Iqbal acknowledged that the redundancy of around 2,500 workers is expected to be unavoidable. However, the government is seeking to ensure that liquidation funds held at the Indonesia Deposit Insurance Corporation (LPS) can be used to pay workers’ severance as well as serve as capital for the company to resume operations. On the regulatory side, Iqbal confirmed that the revision of Manpower Ministerial Regulation Number 7 of 2026 concerning outsourced workers will be completed by early to mid-July 2026. He said the government proposes that the use of outsourcing be permitted only for four types of support jobs: cleaning services, security guards, drivers, and catering. For certain sectors within state-owned enterprises, the use of subsidiaries as labour providers remains possible provided that workers receive full protection, including clear employment relationships, equal wages, social security, and severance rights. “Outsourced workers must receive equal protection. There must be no more outsourcing that merely serves as a means to reduce workers’ rights,” Iqbal said. Iqbal also revealed that his party is proposing to the government that JHT benefits, severance pay, pension guarantees, and holiday allowances be exempted from tax. According to him, JHT benefits originate from workers’ income that has previously been subject to Income Tax Article 21, so taxing the disbursement of JHT constitutes double taxation. “Workers’ wages are already subject to PPh 21 when received. Therefore, when JHT is paid to workers, it should no longer be taxed. I propose that the JHT tax be set at zero per cent as a form of the state’s partiality towards workers,” Iqbal said. He stated that the proposal will soon be formally submitted to the Minister of Finance as part of the policy reform for workers’ welfare protection.