Anticipating Potential Layoffs Ahead of the Fasting Period of Ramadan and Eid

The cancellation of the termination of employment (PHK) for TVRI and RRI workers provides a breath of fresh air to the employment sector.

However, a number of companies in various industrial sectors are seen starting to take efficiency measures by laying off workers in early 2025. Mass layoffs ahead of the fasting month and Eid need to be anticipated.

Due to the impact of budget efficiency in ministries and institutions, in early February, news spread of mass layoffs of permanent, non-permanent, honorary, or contributor employees working under the auspices of TVRI and RRI.

Finally, in mid-February, the Public Broadcasting Institutions or LPP, namely Television of the Republic of Indonesia and Radio of the Republic of Indonesia, cancelled the dismissal of their employees.

However, budget efficiency has an impact on other industrial sectors, such as hotels and services.

Chairman of the Indonesian Hotel and Restaurant Association (PHRI) of South Sulawesi (Sulsel) Anggiat Sinaga explained that hotel income obtained from the regional government budget ranges from 50 to 70 percent.

With efficiency, hotel occupancy will decrease, followed by restaurant business income (food and beverage).

He continued, the number of hotel and restaurant workers under the auspices of PHRI is 29,100 people. If the budget cuts occur, it could result in layoffs of around 15 to 17 percent or as many as 4,000 more hotel employees.

Chairman of the Indonesian Hotel and Restaurant Association (PHRI) Hariyadi Sukamdani also added that the breaking of the fast together by government agencies has also provided a fairly large portion ahead of the Eid moment. With the efficiency policy, the condition can reduce these events.

In Bekasi Regency, West Java, for example, PT Sanken Indonesia has announced plans to close its factory in June 2025.

The closure has affected the fate of 457 workers, not including workers who since last year were offered early retirement options by the company. The reason for the closure is because PT Sanken Indonesia has experienced losses since 2019.

The same thing also happened at PT Yamaha Music Indonesia and PT Tokai Kagu Indonesia. Both will take similar steps early this year. This is as conveyed by the President of the Confederation of Indonesian Trade Unions (KSPI) Said Iqbal.

This wave of layoffs due to company efficiency reasons also occurred globally. Meta and Google also took such steps earlier this year in accordance with regulations in their respective countries.

According to data from the Indonesian Ministry of Manpower (Kemnaker), the number of workers who were laid off from January to December 2024 reached approximately 80,000 people.

This number is higher compared to the total number of workers laid off throughout 2023, which is around 60,000 people.

Apart from the data on 80,000 workers affected by layoffs, the Ministry of Manpower found that there were 60 companies, including those from the textile and garment sector, that had the potential to carry out layoffs.

If we look further, the phenomenon of layoffs a month before Eid al-Fitr appears to be very high in 2023. In February 2023, the number of workers affected by layoffs was 3,892 people.

Then in March 2023, there were a total of 13,634 workers who were laid off. This means that there were 9,742 people who were laid off a month before Eid which fell in April 2023.

In 2024, the mass layoff phenomenon actually occurred during the fasting period before Eid which fell in April 2024. March 2024 data showed that 4,701 workers were laid off. Then in April 2024, the number of workers affected by layoffs increased by 6,434 workers.

When compared between the two years, of course the number of workers affected by layoffs during the fasting month and Eid in 2024 is much less than in 2023. This is because in March 2024, the Ministry of Manpower took anticipatory steps to protect workers' rights.

The first step, the Ministry of Manpower issued a Circular/SE Menaker Number M/2/HK.04/III/2024 concerning the Implementation of the Provision of Religious THR in 2024 for Workers/Laborers in Companies.

It contains seven points of provisions. The first point states that religious THR is given to workers who have worked for one month continuously or more and workers with PKWTT status or a fixed-term work agreement (PKWT).

The second point states that religious THR must be paid no later than seven days before the religious holiday.

The third point regulates how the amount of religious THR is given. First, workers/laborers who have worked continuously for 12 months or more are given THR equal to one month's wages.

Second, for workers/laborers who have worked continuously for one month, but less than 12 months, the THR value is based on the results of the work period divided by 12 months multiplied by 1 month's wages.

Meanwhile, if there are workers/laborers whose employment relationship is based on PKWT or contract and the contract ends before a religious holiday, they are not entitled to THR. This provision is emphasized in Article 7 Paragraph (3) of Permenaker No. 6/2016.

The second step, the Minister of Manpower (Menaker) Ida Fauziyah at that time, opened the THR Post.

This service is provided to receive reports for companies that are late in providing THR (no later than seven days before the holiday) and companies that carry out layoffs before the holiday.

However, if there is no report of a complaint regarding layoffs to the Ministry of Manpower or the labor office, this indicates that the layoff process has been approved by workers and employers.

However, the Ministry of Manpower's anticipatory steps still leave gaps, especially for workers with PKWT (Fixed Term Employment Agreement) and PKWTT (Indefinite Term Employment Agreement) status.

The President of the Indonesian Workers Union Confederation (KSPN) Ristadi said that PKWT and PKWTT workers are entitled to THR, unless the worker is laid off before entering the 30-day period before the religious holiday.

For example, the worker is laid off before Ramadhan starts. If the worker is not in a union, it will make it difficult for them to get assistance/advocacy (Kompas.id, March 29, 2024).

The impact of layoffs that occur every month will certainly increase the open unemployment rate (the ratio of the number of unemployed to the number of the workforce) in Indonesia.

In 2045, the government targets Indonesia's open unemployment rate to reach four percent. In fact, in August 2024, the Central Statistics Agency recorded that the open unemployment rate in Indonesia was still 4.91 percent.

The increasing level of open unemployment certainly has a dominant effect economically and socially. Informal ultra-micro workers, such as traders, motorcycle taxis, and casual laborers, will increase in the increasingly difficult economic situation.

The decline in people's purchasing power, changes in consumption trends, and competition with large-capital businesses are making it increasingly difficult for these informal workers to survive.

Macroeconomic growth during Eid due to money circulation during the fasting and Eid period can be hampered if the government fails to anticipate the wave of layoffs at the beginning of the year.

In fact, quite a few working class people get the opportunity to shop by relying on the THR they receive before the holidays.

This is a challenge that must be quickly addressed and anticipated by Minister of Manpower Yassierli in his early term of office. (LITBANG KOMPAS)