The Shiro Copr , JAKARTA - Wave of job cuts ( PHK ) in the sector excellent work It continues to happen along with the pressures faced by the industry.
President of the Indonesian Business Association (Apindo) Shinta W Kamdani said that currently, the phenomenon of layoffs in labor-intensive industries continues to increase, especially in the textile and textile products (TPT) industry, which is experiencing difficulties.
"But indeed, when looking at the situation, layoffs are continuously increasing, especially in sectors that are also labor-intensive such as TPT, textiles, sectors that are very pressured today," Shinta said during a press conference in Jakarta on Tuesday (29/7/2025).
For that reason, in his opinion, the government needs to launch various supporting policies so that the labor-intensive industry sector can survive and continue to create jobs.
This support includes fiscal incentives such as tax exemption on value-added tax (VAT) for subcontracting services and raw materials, acceleration of VAT refunds, elimination of import duties on raw materials for industries, expansion of the government-paid PPh 21 scheme, as well as more inclusive access to financing.
In addition, the business world also proposed cost stimulus for labor and energy through subsidies for BPJS Health contributions for affected sectors, electricity discounts, gas subsidies, as well as development of renewable energy through rooftop solar power plants with a net-metering scheme.
Shinta explained that all these steps are designed to maintain cash flow, retain production capacity, and prevent further waves of layoffs.
"Our labor-intensive industry is at a crossroads. If it is not given sufficient protection and incentives, we risk losing a sector that has long absorbed a large number of workers," Shinta said.
Meanwhile, in a recent survey by Apindo, 50% of respondents stated that they have reduced their workforce or carried out layoffs due to the current economic uncertainty. This situation is expected to continue in the future.
In a separate occasion, Shinta said, the continuously changing global economic situation, the increasingly tense geopolitical conditions, and the ongoing decline in growth projections have made many companies lack sufficient information to make decisions.
"Finally, many are acting by restraining expansion, slowing down recruitment, and focusing on efficiency rather than taking new risks," said Shinta in her speech at the BRIN Office, Central Jakarta, Monday (28/7/2025).
This condition has even been proven through a recent survey conducted by Apindo. Shinta revealed that the Apindo survey shows more than 50% of respondents stated they have reduced their workforce, and they will continue to do so for an indefinite period.
"In the recent Apindo survey we conducted, more than 50% of respondents stated that they have reduced their workforce, and they will continue to do so," he said.
Trump's Tariff Opportunities
Indonesia and U.S. negotiations that resulted in a reciprocal reduction of trade tariffs from 32% to 19% for Indonesian products are considered to be able to minimize the risk of job cuts in labor-intensive industries.
Shinta believes that if Indonesia is subjected to higher import tariffs, it will affect the exports of TPT, which is feared could trigger a wave of layoffs.
"If now we don't have a better rate than the competitor and there is a shift in orders, it will certainly affect the workforce in Indonesia, and layoffs will only increase. So these are examples of things being done to minimize existing layoffs," he said.
With reciprocal tariffs imposed on Indonesia being more competitive compared to competitor countries, according to Shinta, it can be an opportunity for Indonesia to attract investments in the TPT industry.
"Looking ahead, we still see various opportunities, for example, if the reciprocal tariff of Indonesia is lower than the competing countries in the TPT industry, such as Bangladesh, Vietnam, and others," Shinta said.
According to him, if the reciprocal tariffs imposed on Indonesia are lower, the chances of foreign investors shifting their investments to Indonesia will increase.
Even, Shinta mentioned that several foreign companies from China have started to shift their investments to the country, especially in the retail sector.
"If this [Trump's reciprocal tariff] indeed makes us more competitive, it is not ruled out that we also have investment relocations for this industry, like China, which I think has already started investing in TPT," he said.
Incentives for Labor-Intensive Industries
Researchers from the Center of Reform on Economics (Core) Indonesia, Yusuf Rendy Manilet, consider that the government needs to reconsider providing fiscal incentive packages to labor-intensive industries, such as tax reductions and energy subsidies.
Just that, Yusuf considers that the fiscal incentive proposal for labor-intensive industries needs to be implemented selectively and based on sectoral mapping. In his opinion, the current economic situation is different from the COVID-19 pandemic period, which led to incentives being provided broadly.
"Not all labor-intensive sectors are under the same pressure. For example, the textile and textile products [TPT] sector may be more pressured compared to the food and beverage or footwear sectors. This mapping is important to ensure that incentives are not provided equally, but rather targeted," Yusuf said to Business .
She explained that although global uncertainty remains high due to geopolitical conflicts, US trade policies, China's economic slowdown, and exchange rate and interest rate pressures, the current impact is more sectoral and not as comprehensive as during the pandemic.
Nevertheless, there is one significant similarity, which is the slowdown in demand—both from export markets and domestic markets. The demand slowdown, he added, undermines the competitiveness and sustainability of labor-intensive sectors that absorb a large number of informal and low-wage workers.
In addition, Yusuf reminded that the government's fiscal space is not as wide as during the pandemic. Therefore, incentives must be prioritized for sectors with a multiplier effect ( multiplier effect ) high in terms of labor absorption and domestic demand recovery.
"Government-owed incentives such as PPh 21 could be considered again for low-wage workers, and relaxation of Corporate Income Tax could also be considered, but the scale may not be as large as during the pandemic," he said.
Not only tax relief, Yusuf also believes the government could consider subsidizing industrial energy costs, such as electricity and gas during peak hours, which he considers a significant component in the production cost structure.
In addition, he also assessed that non-fiscal incentives such as export facilitation can be an effective option. Yusuf suggested measures such as reducing logistics tariffs, simplifying export documents, and accelerating VAT refunds can help business actors.
"Such incentives do not directly reduce the fiscal burden, but provide a significant breathing space for business owners," he concluded.
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