Bandung, IndonesiaSentinel.com — The wave of layoffs that initially struck Indonesia’s textile industry appears to have extended to the banking industry. The Institute for Economic and Social Research at the Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), has reported a rise in layoffs within the banking industry, largely driven by the digitalization of services, which has reduced the need for branch office staff.
“Many major banks in Indonesia are downsizing their workforce and transitioning to digital services to improve operational efficiency,” said Muhammad Hanri, a researcher at LPEM FEB UI, in the institute’s Labor Market Brief, released on Friday, September 13, 2024.
Hanri noted that the layoffs in the banking and financial industries highlight that the surge in job cuts isn’t solely due to macroeconomic factors. According to him, the layoffs are also a result of structural shifts within industries influenced by technological advancements.
“Thus, the causes of layoffs across various sectors heavily depend on specific sectoral dynamics and prevailing economic conditions, implying the need for more responsive and contextual labor policies,” he added.
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While LPEM FEB UI did not provide specific figures for banking employees affected by digitalization, data from Indonesia’s Ministry of Manpower indicates that a total of 237,080 workers nationwide were laid off between January and October 2023. The peak of layoffs occurred in October 2023, when 45,576 individuals lost their jobs.
In the first half of 2024 alone, the ministry recorded 32,064 layoffs, marking a 21.45% increase compared to the same period the previous year. The capital city, Jakarta, recorded the highest number of layoffs with 7,469 workers affected, followed by the provinces of Banten and West Java.
One of the most significant layoff events in 2024 occurred at Commonwealth Bank Indonesia (PTBC), where 1,146 employees were let go mid-year following the acquisition of the bank by OCBC NISP Tbk in May 2024.
This wave of layoffs underscores the broader challenges facing Indonesia’s labor market as the country continues to adapt to digital transformation across various industries.
(Raidi/Agung)
