The Ministry of Manpower (Kemnaker) has begun taking anticipatory steps in response to the weakening trend in Indonesia's industrial sector. This situation emerged after the Indonesian Manufacturing Purchasing Managers' Index (PMI) data contracted deeply to 46.9 in June 2026, triggering concerns over a wave of layoffs across various industrial lines.
Deputy Minister of Manpower, Afriansyah Noor, acknowledged that the decline in manufacturing activity is directly proportional to the potential reduction in the workforce. According to him, the slowdown in production at factories will directly impact the sustainability of jobs for workers.
As a mitigation measure, the government is committed to providing social buffers as well as alternative opportunities. The prepared strategy includes providing reskilling and upskilling programs for workers who have lost their livelihoods, so they can be re-absorbed into other employment sectors.
Data from BPJS Ketenagakerjaan (Workers Social Security Agency) recorded significant figures regarding the current labor conditions. As of May 2026, around 36,000 workers have filed for Job Loss Insurance (JKP) claims, an indicator reflecting the economic challenges currently faced by the manufacturing sector.
This industrial weakening is triggered by a combination of internal and external factors. S&P Global noted a decline in domestic demand caused by eroded public purchasing power, coupled with weakening export orders. This condition is compounded by surging production costs due to rising raw material prices and exchange rate fluctuations that squeeze manufacturers' profit margins.
