The Center of Reform on Economics (CORE) Indonesia has warned that the wave of layoffs in the country is far from over, projecting that tens of thousands of workers could lose their jobs in the second half of 2026 amid mounting economic pressures at home and abroad.
In its latest research report titled “Badai PHK (Belum) Berlalu” (The Layoff Storm Is Not Over Yet), CORE estimates that between 15,300 and 20,300 additional workers could be laid off in the coming months. The study was authored by researchers Yusuf Rendy Manilet, Azhar Syahida, Dwi Setyorini, and Lailatun Nikmah.
“There is a potential additional wave of layoffs of 15,300 to 20,300 workers,” CORE wrote in its report, as cited on Friday (29/05).
The research highlights that the manufacturing sector is expected to be the hardest hit by the potential job cuts, followed by the services and agriculture sectors. According to CORE’s breakdown, manufacturing alone could account for between 8,700 and 12,100 job losses, while services may see 3,300 to 4,500 layoffs, and agriculture between 3,300 and 3,600 workers affected.
“Layoffs are most likely to occur in the manufacturing sector, reaching approximately 8,700–12,100 workers, followed by the services sector with 3,300–4,500 workers, and agriculture with 3,300–3,600 workers,” the report stated.
CORE attributed the potential wave of layoffs to a combination of domestic and international economic pressures, including geopolitical tensions in the Strait of Hormuz and continued depreciation of the Indonesian rupiah.
The think tank warned that if disruptions in the Strait of Hormuz persist for the next two to three months, companies may face raw material shortages alongside further currency weakening, with the rupiah potentially exceeding Rp17,400 per US dollar.
“Assuming that disruptions in the Strait of Hormuz continue for the next two to three months, companies will face raw material shortages and the exchange rate will continue to weaken beyond Rp17,400,” CORE wrote.
The weakening rupiah is expected to significantly increase production costs, particularly in the manufacturing sector, which relies heavily on imported inputs. CORE noted that industries facing input cost increases above 1.5% could see output reductions of around 0.1%.
For firms experiencing smaller increases in input costs—below 1.5%—output is still projected to decline by approximately 0.01%. In a more severe scenario, CORE warned that companies facing cost increases of 1.5% or more due to currency depreciation could see output fall by as much as 0.15%.
“In a worst-case scenario, companies facing an increase in production input prices due to exchange rate depreciation of 1.5% or more will experience an output contraction of 0.15%,” the report added.
CORE said the expected slowdown in production and potential layoffs could push Indonesia’s unemployment rate higher, either through rising joblessness or increased movement into the informal sector.
As of February 2026, Indonesia’s informal workforce had already reached 87.74 million people, accounting for approximately 59.42% of the country’s total active labour force.
The findings underscore growing concerns over labour market resilience as Indonesia navigates a complex mix of global uncertainty, currency pressures, and sectoral vulnerabilities, particularly in manufacturing, which remains a key driver of formal employment in the economy.
Economists have warned that sustained external shocks could further strain businesses, especially small and medium-sized manufacturers that have limited capacity to absorb rising input costs. Without policy intervention or stabilisation in global supply chains, CORE suggests that labour market conditions could deteriorate further in the coming months.
