Kadin Urges Entrepreneurs To Avoid Layoffs From Employees Following The UMP To Increase By 6.5 Percent

Photo: Doc. Antara

Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Anindya Bakrie asked employers to avoid termination of employment (PHK) employees following the increase in the provincial minimum wage (UMP) by 6.5 percent by 2025.

Anindya in a press conference after the 2024 Kadin National Leadership Meeting (Rapimnas) in Jakarta, Sunday, December 1, asked the company to take various steps so that the UMP increase policy did not have an impact on increasing the unemployment rate.

"We certainly want to try from the company, from Kadin appealed, (the company) did all kinds of ways so that there were no layoffs," said Anindya, as reported by Antara.

According to him, layoffs should be the last option taken by employers. Layoffs will only increase the population of people who have lost their income, thus exacerbating economic conditions.

Kadin also highlighted the Government's plan to form a layoff task force. It is hoped that the Task Force will be able to help the company find solutions so that they do not have to lay off due to the adjustment of the UMP.

"But we want to see how the Task Force is and definitely usually cooperates with the business world. Because those who do layoffs are from the business world, either from SOEs, cooperatives or the private sector. So we will communicate to see," he said.

Even so, Anindya admits that the company's condition is different, so that some entrepreneurs may face severe pressure in balancing business continuity and employee welfare. However, he still hopes that there will be innovative steps to avoid difficult decisions such as layoffs.

As an organization that accommodates business actors, Kadin continues to encourage companies to think long-term.

"But indeed as entrepreneurs, we also think about continuing. So sometimes the choice is not pleasing to be taken, but sometimes it is an option," said Anindya.

Although layoffs sometimes become unavoidable steps, Anindya is optimistic that with the right strategy, the company will be able to overcome these challenges without having to reduce the number of employees.

"But we see quite a lot of efforts to prevent and find ways so that it doesn't happen (PHK)," he said.

Previously, Coordinating Minister for the Economy Airlangga Hartarto said that the government immediately formed a Task Force for Termination of Work Relations (Satgas LAYOFFS) after the UMP increase policy in 2025 was 6.5 percent.

"The government will make a task force related to layoffs," said Airlangga on the sidelines of attending the 2024 Kadin National Leadership Meeting (Rapimnas) in Jakarta, Sunday.

The plan to form a layoff Task Force is the government's response to the potential layoffs taken by the company against employees or workers following the increase in the UMP.

"So what we see is the fundamentals of the industry. So later we will study it there," said Airlangga.

Previously, President Prabowo Subianto announced an increase in the average national minimum wage by 6.5 percent for 2025, based on the results of decisions through a limited meeting with related parties, Friday, November 29 afternoon.

"We have made the decision to increase the national minimum wage average by 2025 by 6.5 percent," said the President in his announcement at the Presidential Office, Presidential Palace Complex, Jakarta.

The President said this increase was slightly higher than the proposal of the Minister of Manpower, Yassierli, who previously recommended an increase of 6 percent.

The decision was taken after a limited meeting discussing the minimum wage as a social safety net for workers, especially those who worked less than 12 months.

The President explained that the final decision was taken after going through in-depth discussions, including with labor leaders.

The President also emphasized that this determination aims to increase the purchasing power of workers while maintaining business competitiveness.