Indonesia faces potential mass layoffs threatening thousands of workers

Indonesia could see a wave of mass layoffs affecting up to 2,500 employees at PT Pakerin, a wood‑pulp paper producer in Mojokerto, East Java, and around 4,000 workers at PT Feng Tai, a shoe manufacturer in Bandung, West Java, after a loss of Nike orders. The risk also extends to the automotive component sector in Pasuruan and Mojokerto, where Japanese parent firms are shifting production abroad.

President’s Special Advisor on Labour, Said Iqbal, said the companies face capital constraints after the liquidation of Bank Prima, leaving about Rp800 billion‑Rp1 trillion of working capital under the supervision of the Deposit Insurance Corporation. He outlined two options: secure the funds to keep operations running or allocate the money for severance if layoffs proceed. Iqbal plans to raise the issue with President Prabowo Subianto for possible policy action. "Ditemukan ada potensi ancaman 2.500 pekerja akan di‑PHK," he told a press conference.

The threat is linked to broader global economic pressures, exchange‑rate volatility and geopolitical tensions affecting supply chains, especially for raw‑material imports and overseas production shifts.