As the holy month of Ramadan approaches, bringing with it the joyous celebrations of Lebaran or Eid al-Fitr, the mood for thousands of Indonesian workers is anything but festive. In Sukoharjo, Central Java, a textile factory worker was photographed weeping as she listened to a farewell speech on 28 February 2025, marking the end of an era for PT Sri Rejeki Isman, popularly known as Sritex. Once South-east Asia’s largest textile manufacturer, Sritex was declared bankrupt by Indonesia’s Supreme Court after failing to settle its debts, leading to the loss of over 10,000 jobs. This devastating closure is not an isolated incident but a stark symbol of a broader crisis gripping Indonesia’s manufacturing sector—and raising urgent questions about the country’s economic future.
For workers like Sriyono, a 52-year-old father of three who spent 33 years at Sritex’s Solo factory, the layoffs are a personal tragedy. “I still can’t believe this… I didn’t change companies because it feels like family here. I feel so sad, I’m speechless,” he shared in a poignant phone conversation. With his final paycheck of 2.3 million rupiah (approximately £115) needing to stretch through the Eid holidays at the end of March and beyond, Sriyono faces an uncertain future. “It’s our tradition to celebrate Lebaran, but we also have to save money,” he added, encapsulating the dilemma of many Indonesians caught in this wave of unemployment.
A Wave of Closures and Rising Unemployment
The collapse of Sritex is part of a troubling trend. According to the Indonesian Filament Yarn and Fiber Producers Association (APSYFI), at least 60 other textile and garment manufacturers have shut down between January 2023 and December 2024. The closures extend beyond textiles, with major firms like Yamaha Music (piano manufacturing), Sanken Electronic (electric components), and Danbi International (fake eyelashes) also ceasing operations in early 2025. The Indonesian Trade Union Confederation (KSPI) reported that 60,000 workers from 50 companies lost their jobs in January and February alone. 
Worse still, the outlook for 2025 is grim. Indonesia’s Center for Research, Parliamentary Expertise Agency, projects that 280,000 workers could be laid off this year—the highest annual figure since the Covid-19 pandemic, which saw 3.6 million job losses in 2020. Economist Dr Muhammad Hanri from the University of Indonesia estimates this could push the unemployment rate to 5.2% of the country’s total working population, a significant burden for South-east Asia’s largest economy.
These numbers are not mere statistics; they represent shattered livelihoods and growing anxiety among Indonesians already grappling with economic uncertainty. The timing of these layoffs, just before the culturally and economically significant Eid al-Fitr celebrations, amplifies their impact, as families like Sriyono’s struggle to balance tradition with financial survival.
Government Policies Under Scrutiny
Analysts point to systemic issues as the root cause of this crisis, particularly the Indonesian government’s failure to shield domestic industries from foreign competition. Bhima Yudhistira, executive director of the Center of Economic and Law Studies, a Jakarta-based think tank, argues that the government has prioritised attracting new investments over sustaining existing industries. Recent policy changes, such as easing import regulations and offering tax incentives, have inadvertently flooded the market with cheaper foreign goods—especially textiles from China—undercutting local manufacturers like Sritex.
“The government is busier attracting new investments rather than maintaining existing industries,” Yudhistira told regional media, highlighting a policy mismatch that has left domestic firms vulnerable. This critique comes amid broader concerns about Indonesia’s economic direction, as the country recorded its first deflation in over two decades in February 2025. The Central Bureau of Statistics (BPS) reported a year-on-year consumer price index (CPI) decline of 0.09%, a phenomenon not seen since March 2000.
While BPS chief Amalia Adininggar Widyasanti attributed this deflation to temporary factors like discounted electricity tariffs in January and February, economists warn of deeper issues. Dr Jahen Fachrul Rezki from the Institute for Research on Economics and Society at the University of Indonesia cautioned that sustained deflation could signal declining consumption and investment. “Ongoing deflation needs to be anticipated, as it reflects a decline in consumption and investment from both people and businesses,” he noted, urging policymakers to act decisively.
Economic Growth Targets and Populist Measures
Indonesia’s economic growth stood at 5.03% for 2024, with projections of 5% for 2025—a respectable figure, yet far below the ambitious 8% target set by President Prabowo Subianto for his first term. In response to mounting economic pressures, the government unveiled a series of stimulus measures in December 2024, including 445.5 trillion rupiah (approximately £22.5 billion) for social assistance programmes aimed at low- and middle-income households, alongside tax breaks and industry incentives.
More recently, special discounts for the Ramadan and Eid holidays—such as reduced flight tickets, toll fees, and shopping rebates—have been introduced to boost consumer spending. Additionally, 50 trillion rupiah has been allocated for holiday allowances for 3 million civil servants, a move designed to enhance purchasing power during a critical period. However, critics like Dr Jahen argue that these measures, while populist in appeal, fall short of addressing structural challenges. “To address deflation, the government must strengthen purchasing power and create quality jobs—not just increase job numbers,” he emphasised.
The government, for its part, maintains that the situation is under control. On 5 March 2025, Indonesia’s Minister of Manpower, Prof. Yassierli, assured the public that the manufacturing sector continues to show signs of growth and promised financial aid for displaced Sritex workers. Yet, for many like Sriyono, such assistance feels distant and insufficient against the immediate backdrop of lost income and looming household expenses.
A Broader Economic Warning?
The layoffs and factory closures are not occurring in isolation but against a backdrop of slowing consumption and weakening economic indicators in South-east Asia’s largest economy. The deflationary trend, while partly attributed to temporary policy adjustments, raises concerns about long-term demand stagnation. If consumption continues to falter, businesses may scale back further, exacerbating unemployment and creating a vicious cycle of economic decline.
Moreover, the textile industry—a historically significant sector for Indonesia’s economy and employment—faces unique challenges in the global market. Cheaper imports, particularly from China, have long pressured local manufacturers, but the scale of recent closures suggests a tipping point may have been reached. Without targeted interventions to bolster domestic industries, such as tariffs on imported goods or subsidies for local producers, Indonesia risks losing a critical economic pillar.
Speculative analysis suggests that if the government fails to recalibrate its trade and industrial policies, further layoffs could ripple across other sectors, potentially undermining President Prabowo’s growth targets. However, it must be noted that such outcomes remain unconfirmed, and there is no definitive evidence yet of broader sectoral collapse. The government’s stimulus measures, if implemented effectively, may yet provide a buffer against worsening economic strain.
The Human Cost of Economic Policy
At the heart of this crisis are the workers and families bearing the brunt of these economic shifts. For individuals like Sriyono, who dedicated decades to companies they viewed as family, the layoffs are not just a loss of income but a profound personal blow. As Indonesians prepare for Lebaran, a time of communal joy and renewal, the stark contrast of empty wallets and uncertain futures casts a long shadow over the festivities.
The road ahead for Indonesia’s economy remains uncertain. While the government’s stimulus packages and holiday discounts aim to inject life into consumer spending, they are temporary measures in the face of structural challenges. Economists and analysts agree that sustainable solutions—protecting domestic industries, fostering quality job creation, and addressing deflationary pressures—are essential to prevent further hardship.
For now, workers like Sriyono can only hope that promised aid arrives in time to salvage their celebrations and livelihoods. As he poignantly noted, “We need to make sure that the last salary we have will last after Eid.” His words echo the quiet desperation of thousands across Indonesia, waiting for policies to translate into tangible relief in one of South-east Asia’s most dynamic yet vulnerable economies.
