Indonesia faces record layoffs and first deflation in decades

Thousands of Indonesians are facing a challenging Eid al-Fitr as mass layoffs hit the textile and manufacturing sectors. Over 10,000 workers at PT Sri Rejeki Isman, known as Sritex, were laid off after the company went bankrupt. One of the workers, Mr. Sriyono, expressed his sorrow at losing a job he held for 33 years. The textile industry is not alone; at least 60 other manufacturers have shut down since early 2023. These closures have resulted in around 60,000 job losses in just the first two months of 2025. Experts predict that an estimated 280,000 workers could be laid off by the end of the year, marking a significant increase in unemployment. Analysts blame government policies for failing to protect local industries from foreign competition, particularly cheaper imports from China. They say the focus has been more on attracting new investments rather than supporting existing companies. Economic challenges are compounded by the first recorded deflation in Indonesia in over 20 years. In February, the consumer price index fell 0.09% year-on-year. Economists warn that this could indicate weakening consumption and investment in the economy. Despite an expected economic growth of around 5% in 2025, this is below the target set by President Prabowo Subianto. The government has implemented stimulus measures to assist low- and middle-income families, including discounts during Ramadan and financial support for civil servants. The government insists that the situation is under control and that the manufacturing sector shows signs of growth. However, workers like Mr. Sriyono are concerned about making ends meet, especially with Eid celebrations approaching. He hopes that financial aid will come soon enough to support his family during this festive season.