Tobacco Excise Hike: Manpower Ministry Warns of Potential Layoff Wave

The Manpower Ministry (Kemnaker) has warned of potential layoffs in the tobacco products industry (IHT) as a consequence of the increase in tobacco excise duties (CHT). This policy is implemented under Government Regulation (PP) Number 28 of 2024.

Meynar Kusumo Wulandari, Head of the Industrial Relations Institutional Working Group at the Ministry, stated that every excise increase has a direct correlation with the efficiency measures taken by companies. This situation is exacerbated by a potential decline in production volume due to weakened consumer purchasing power.

“Every effective excise increase has a direct correlation with company efficiency. Because the excise rises, efficiency measures are inevitable. Then there is a decline in production volume due to weakened purchasing power and shifts in consumption,” Meynar said during a discussion in Jakarta on Friday (26/6).

According to her, these conditions could trigger a domino effect of layoffs in this labour-intensive sector. Job losses in the IHT sector not only eliminate individual income but also threaten the broader welfare of workers’ families.

“The domino effect of layoffs, losing a job in the IHT sector does not just eliminate individual income, but threatens the welfare of families considering the large labour absorption in this sector,” she explained.

Meynar added that the impact of layoffs would extend to affecting the education and health factors of the families left behind. She also highlighted the challenges faced by workers affected by efficiency measures in re-entering the job market.

“Workers vulnerable to efficiency measures often face difficulties being absorbed in other formal industrial sectors due to skill mismatches and age factors,” she concluded.