The 2025 Layoff Wave: When Workers' Rights Are Tested Amidst Economic Storms

Imagine receiving a termination letter in the morning, and by the afternoon, having to explain to your family that the main source of household income has just vanished. This scenario was far from rare in Indonesia throughout 2025. According to data from the Ministry of Manpower’s official website, the number of layoffs (PHK) reached 88,519 workers by December, a surge of 25-30% compared to the previous year. West Java recorded the highest number of layoffs, with approximately 18,815 workers affected, followed by Central Java and Banten, driven by a decline in production within the textile, garment, and electronics sectors.

Four major forces have reinforced this wave of job cuts. A sluggish global economy has suppressed exports and investment. Domestically, the massive adoption of automation and artificial intelligence for cost efficiency has rendered many roles redundant, while a skills gap prevents workers from transitioning to modern sectors. The weakening rupiah, which hit Rp16,785 per US dollar, further increased the cost of imported raw materials and operational expenses. Additionally, the prevalence of contract and outsourcing work models means that non-permanent employees are the first to be affected by efficiency measures.

Under Government Regulation No. 35 of 2021, laid-off workers are legally entitled to four main protections: severance pay calculated based on years of service, long-service awards, compensation for unused rights such as annual leave, and access to the Job Loss Insurance (JKP) programme managed by BPJS Ketenagakerjaan. The JKP provides cash benefits equivalent to 60% of the last drawn wage for up to six months, along with access to training and job vacancy information. Companies are legally obligated to follow proper termination procedures, pay all entitlements on time, and ensure non-discriminatory treatment.

The case of PT Sri Rejeki Isman Tbk (Sritex) became a stark illustration of the crisis. After being declared bankrupt, the textile giant laid off more than 10,000 employees. BPJS Ketenagakerjaan recorded approximately 35,000 JKP claims between January and March 2025, including 10,000 from former Sritex workers—a nearly 100% increase from the previous year. The government has disbursed over Rp90 billion in Old Age Security (JHT) and JKP funds for Sritex workers, demonstrating that the safety net is functioning, but also underscoring the massive human impact of a single corporate decision.

While Indonesia’s legal framework for worker protection is fairly comprehensive, implementation remains imperfect. Reports of delayed payments and unpaid severance are still common. Contract and outsourcing workers remain the most vulnerable group, as many are not registered in the JKP or BPJS Ketenagakerjaan programmes, highlighting the need for stronger oversight rather than just new regulations on paper. The impact of layoffs extends beyond lost income, often leading to psychological distress and family economic burdens that can trigger household conflicts if not properly managed. The 2025 layoff wave serves as a reminder that protecting workers’ rights cannot rely solely on legal texts; it must be realised through consistent supervision, corporate compliance, and workers’ own awareness of their rights. Behind every layoff statistic is a human being with a family and hopes, waiting for fair treatment.