Another wave of layoffs hits, Indonesia on the verge of recession?

GIACARTA, KOMPAS.com – The wave of layoffs (PHK) has hit again, amid Indonesia’s economic growth recovery from the Covid-19 pandemic.

Some time ago, layoffs occurred in a number of to boot or domestic start-ups. Now, wave of layoffs spread to numerous other companies. Indonesia is on the brink recession?

Center of Economic and Law Studies (Celios) director Bhima Yudhistira said the big wave of layoffs in the country is due to companies having to adjust their production capacity and business model with the expected economic slowdown next year. .

“The increase in the cost of raw materials, transport costs do not go hand in hand with the increase in the purchasing power of people”, said Bhima as reported by Antara Kontan.co.id, Monday (10/10/2022).

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Bhima said that several companies in the technology sector, previously named pandemic treasure also the need to cut employees due to the mobility of people returning to shop physically in retail stores, so that changes in consumer behavior greatly affect long-term business plans.

The number of layoffs in the country is also due to the increase in the reference interest rate which affects the cost of financing operators in the sector so that new investment plans tend to be hindered by the increase in financial burdens.

Furthermore, he also said, the uncertainty of the economic outlook has also affected the financing of start-ups, so investors or venture capitalists are more selective in choosing companies with good profitability performances rather than pursuing. market share or evaluation.

“In this situation, many employees have been forced to cut to attract investors,” said Bhima.

Bhima predicts that the open unemployment rate next year will be between 5.9% and 6% or higher than the data for February 2022, which was only 5.83%.

Read also: There is a wave of layoffs, JHT requests increase by 2.2 million workers

Meanwhile, the Economist Institute for Development of Economics and Finance (Indef) Nailul Huda estimated that very high global inflation was the cause of the high number of layoffs in domestic companies. Where inflation in developed countries has reached 9 percent to 10 percent.

Huda said inflation forced central banks in several countries to raise key interest rates in order to reduce demand for products and investments. Eventually, with the demand for products and the decrease in investment it will create layoffs.

“This condition also occurs in Indonesia, where the policy of increasing Pertalite fuel prices raises the inflation rate. As the benchmark interest rate rises, unemployment is expected to rise,” said Huda. (Dendi Siswanto)

This article was published on Kontan.co.id under the title Flood of layoffs, Indonesia on the verge of recession?

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