President Prabowo Subianto’s recent pledge to form a special task force aimed at curbing layoffs across Indonesia has reportedly sparked unease among business leaders, who fear the initiative could stray from its original purpose and become a regulatory hammer rather than a helping hand.

Announced during his May Day address to hundreds of thousands of workers in Jakarta, the president positioned the task force as a safeguard against unjust dismissals and a mechanism to promote stronger labour protections.

His declaration came against a backdrop of rising job insecurity, with 60,000 workers from 50 unionised companies having already been let go in the first two months of 2025, a figure alarmingly close to the total layoffs for all of 2024.

“We will not allow people, workers, to be laid off arbitrarily. If necessary, the state must not hesitate to intervene,” Prabowo said, vowing that the government would not sit on its hands while workers’ rights were under threat.

Yet for the business community, especially labour-intensive sectors, the proposal has raised more questions than answers.

The Indonesian Textile Association (API) warned that unless properly implemented, the task force might end up stifling rather than supporting business activity.

Risk of overreach

API Executive Director Danang Girindrawardana sounded the alarm, cautioning that the task force must stay firmly rooted in its preventive mission. “It’s a worrying idea for any labour-intensive industry player,” he said on 1 May, as reported by Bisnis.

His concern was that the task force could morph into a vehicle for criminalising employers under the guise of protecting workers, discouraging firms from operating or expanding.

Danang warned that if the task force pivots towards financial audits and punitive measures, it could send the wrong signal to investors and operators alike.

“There is no business without workers, and no workers without businesses. The two must understand and respect one another,” he said, calling for industrial relations to be viewed as a two-way street rather than a zero-sum game.

Context of recent layoffs

Danang referenced recent cases of mass terminations to illustrate the complexity of labour disputes. One example was PT Yihong, a footwear manufacturer, where a relatively minor disagreement spiralled into a full-scale strike, ultimately leading to widespread layoffs.

In other cases, such as Yamaha-owned piano factories and textile giant PT Sri Rejeki Isman (Sritex), job losses stemmed from financial distress and bankruptcy – not managerial negligence.

Such examples, he argued, highlight the risk of depicting all layoffs in the same light. While worker protection is paramount, it must not come at the expense of business viability.

Calls for synergy, not duplication

Danang also stressed the need for the task force to complement, rather than duplicate, existing labour frameworks. Indonesia already has tripartite consultations in place, bringing together government, employers and workers to mediate disputes and steer policy. Redundancy could create more confusion than clarity.

Rather than reinventing the wheel, he suggested aligning the new task force’s objectives with ongoing labour dialogue efforts, focusing on mediation and early intervention before disputes snowball into full-blown crises.

New council proposed for policy reform

Alongside the task force, President Prabowo also unveiled plans to form a National Workers Welfare Council. This new advisory body, comprising trade union leaders and public figures, would be responsible for reviewing current labour laws and proposing reforms to the president with the goal of enhancing worker protections across the board.

The announcement reflects mounting public pressure to address labour market instability, particularly after two consecutive years of rising layoff numbers. Official figures from the Manpower Ministry show that layoffs jumped to 77,965 in 2024, up from 64,855 in 2023 and just 25,114 in 2022.

Protecting workers' welfare while promoting business resilience

The government now faces the tricky task of balancing worker welfare with business resilience. Overregulation or adversarial enforcement could chill economic activity just as businesses are striving to regain momentum post-pandemic. Yet failing to act on workers’ concerns may risk further unrest and erode public trust.

For business leaders, while the aim of safeguarding workers is laudable, execution must be carefully calibrated. Good intentions mean nothing unless the task force is steered wisely.