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US tariffs spark layoff concerns, risk expanding informal sector
Before the world felt the blow from US tariffs, there were an estimated 80,000 layoffs in Indonesia last year, according to official data from the Manpower Ministry. The ministry also estimated another 18,610 workers were laid off during the first two months of this year
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Workers and employees of textile giant PT Sri Rejeki Isman (Sritex) listen to a speech by the company's board of directors at its factory in Sukoharjo, Central Java, on Feb. 28, 2025. Sritex ceased operations starting March 1 the same year after being declared bankrupt by the Semarang Commercial Court. (Antara/Mohammad Ayudha)
T
he United States’ tariffs on imports from Indonesia could put more workers at risk of layoffs, economists have warned, adding that an increase in unemployment could also lead to the expansion of the local informal sector, which could hinder economic growth in the long term.
Just days after US President Donald Trump unleashed his widespread tariffs on April 2, experts from multiple local industries, including textiles, furniture, fisheries as well as food and beverages, said Washington’s policy could hamper exports and lead to more job losses in the country.
The Confederation of Indonesian Trade Unions (KSPI) said on April 9, that tariffs would drive up the price of Indonesian goods in the US market, making them less competitive with goods from other countries.
“Consequently, it leads to declining foreign demand and local output, and companies will implement efficiency measures, including layoffs. In some cases, companies will even opt to cease operations,” he told The Jakarta Post.
Read also: Unions decry manufacturing layoffs
Before the world felt the blow from US tariffs, there were an estimated 80,000 layoffs in Indonesia last year, according to official data from the Manpower Ministry. The ministry also estimated another 18,610 workers were laid off during the first two months of this year.
The Indonesian Employer’s Association (Apindo), however, estimated a higher toll amounting to 250,000 workers last year, noting in March that the government may have underestimated the real figure due to a lack of reporting compliance.
