Apindo Urges Boosting Public Purchasing Power Amid Surge in Layoffs

TEMPO.CO, Jakarta - Bob Azam, head of labor affairs at the Indonesian Employers Association (Apindo), says the government must urgently strengthen public purchasing power to spur economic growth. Apindo estimates that 250,000 workers will be affected by layoffs this year.

"Nearly every country in the world now relies on domestic consumption," Bob said on Sunday, May 25. In addition to purchasing power, Bob also called for accelerated policy deregulation to ease the high-cost pressures faced by businesses.

He also emphasized the need to deregulate the labor sector, including employment relationships, wage systems, and severance arrangements, but added that "oversight must be tightened." In addition, he said, workers' wages must be raised and their skills improved, suggesting the government to help fund worker reskilling efforts.

The rising layoff trend, Bob said, can already be seen in key economic indicators, including a slowdown in credit growth, which dropped from double digits to single digits. In April 2025, year-on-year credit growth stood at 8.8 percent, down from 9.16 percent in March and 10.3 percent in February.

He also pointed to a sharp decline in Indonesia's Manufacturing Purchasing Managers' Index (PMI), which dropped 5.7 points in April to 46.7, which is the worst reading since the COVID-19 pandemic in 2022. Other red flags include a fall in consumer spending and a dip in the Consumer Confidence Index, which slid to 121.1 in March from 126.4 the month before.

Layoffs are expected to hit labor-intensive export sectors, services, and retail, Bob warned. "That includes tourism, hotels, construction, automotive, and electronics," he said.

Apindo's forecast closely mirrors projections from the Social Security Agency for Employment (BPJS Ketenagakerjaan). "The projected number of layoffs for 2025 is around 280,000," BPJS Supervisory Board chairman Muhammad Zuhri said during a meeting with the DPR's Commission IX on Monday, May 20. As of April, BPJS had recorded 24,360 layoffs.

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