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View all search resultsLayoff-free SOE overhaul deemed 'unrealistic'
Experts suggested that workforce reductions would likely be framed as early retirement or voluntary resignation packages accompanied by generous compensation.
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The logo of the State-Owned Enterprises (SOEs) Ministry is seen installed in front of the ministry's building in Jakarta on Jan. 1, 2025. (Shutterstock/Zaen_M)
A
s the government pushes ahead with plans to reduce the number of state-owned enterprises (SOEs) from 1,077 companies to between 200 and 300 by the end of 2026, state asset fund Danantara has insisted that the restructuring will not result in mass layoffs.
However, experts argue that workforce reductions are an inevitable consequence of such large-scale corporate restructuring and have urged the government to adopt a proper approach to safeguard workers' welfare throughout the process.
According to Danantara chief operating officer Dony Oskaria, around 52 percent of SOEs are currently unprofitable, with cumulative losses reaching Rp 20 trillion (US$1.1 billion). Dony said retaining workers would remain financially viable because annual labor costs at the companies being streamlined amount to only Rp 2 trillion to Rp 3 trillion, far below the estimated Rp 50 trillion in annual savings expected from consolidation.
He argued that most savings would come from eliminating inefficient multilayered transactions among parent companies and its subsidiaries, while employees would remain within the consolidated entities in line with President Prabowo Subianto's directive that workers should not bear the cost of the restructuring.
Read also: Budget cuts leave regions struggling to pay contract employees
However, Center of Economic and Law Studies (Celios) executive director Bhima Yudhistira said the government's assurance was difficult to reconcile with the stated goal of consolidation.
"That's unrealistic. It's just bluffing. Even the formation of SOE holding companies led to layoffs, let alone a plan to significantly reduce the number of subsidiaries," Bhima told The Jakarta Post on Thursday.
