Mass Layoffs in Indonesia: 23,470 Workers Affected by PHK in 2026 (Jan-May) – Economic Job Crisis Deepens

Indonesia recorded 23,470 layoffs between January and May 2026, as businesses struggled with currency depreciation and global economic instability. Data from the Ministry of Manpower (Kementerian Ketenagakerjaan) indicates a significant trend of workforce reductions across various sectors during the first five months of the year.

The surge in job losses is attributed to a combination of macroeconomic pressures, including the volatility of the Indonesian Rupiah and disruptions caused by ongoing conflicts in the Middle East. These external factors have increased operational costs for manufacturers and importers, forcing companies to reduce headcount to maintain financial viability.

Regional Impact and Currency Volatility

West Java has emerged as one of the most affected regions in the country. The West Java Chamber of Commerce and Industry (KADIN Jabar) reported that 3,339 employees in the province were laid off specifically due to the weakening of the Rupiah.

The depreciation of the local currency has particularly impacted industries reliant on imported raw materials. As the cost of production rises, companies in the West Java industrial corridor have faced shrinking profit margins, leading to a higher frequency of workforce terminations.

Future Job Risks and Economic Forecasts

Research from the Center of Reform on Economics (CORE) Indonesia suggests that the current wave of layoffs has not yet peaked. According to reporting by CNN Indonesia, CORE estimates that an additional 20,000 workers are currently threatened with job loss.

The research indicates a fragile state of worker resilience, where a lack of diverse income streams and limited savings make the impact of sudden unemployment more severe for the average Indonesian laborer.

Government Response and the JKP Program

To mitigate the social and economic impact of these redundancies, the Indonesian government is utilizing the Job Loss Guarantee (Jaminan Kehilangan Pekerjaan or JKP) program. This initiative is governed by Government Regulation (PP) Number 6 of 2025, which outlines the administration and benefits available to displaced workers.

The JKP program provides three primary forms of support to eligible workers who have been laid off:

• Cash benefits provided for a specified period to maintain basic living standards.
• Access to job market information to facilitate faster re-employment.
• Vocational training and skills upgrading to help workers transition into new roles or sectors.

The Ministry of Manpower has integrated these services through the Satudata Kemnaker system to streamline the application process and ensure that benefits reach victims of layoffs efficiently.

Macroeconomic Drivers

Analysts point to the instability in the Middle East as a primary driver of the current economic climate. Conflict in the region has led to fluctuations in energy prices and shipping costs, which in turn puts pressure on the Rupiah.

For Indonesian firms, this creates a dual challenge: rising costs of energy and logistics combined with a weaker currency that makes essential imports more expensive. When these costs cannot be passed on to consumers, corporate restructuring and layoffs often become the primary tools for cost management.

The current situation reflects a broader vulnerability in the industrial sector, where reliance on global supply chains leaves domestic employment levels susceptible to geopolitical shocks.