The increase in layoffs and open unemployment can have a negative multiplier effect on the national economy. Resolving these issues is also not easy due to their structural implications.

"It won't be easy to resolve, especially if the policy direction actually worsens the situation, which will lead to a decline in the economy. Layoffs and the delayed cancellation of the 12 percent VAT increase, as well as the weakening rupiah, have all contributed to price increases," said Hendri Saparini, senior economist and founder of the Center of Reform on Economic (CoRE) Indonesia, when contacted.

According to him, the middle class, which accounts for 84 percent of household consumption, will automatically suppress demand due to rising prices. This will ultimately impact economic growth, as household consumption remains the dominant portion of national GDP.

"This situation also ultimately puts pressure on government tax revenue, because this group's tax contribution is more than 50 percent," Hendri added.

Layoffs and unemployment cause purchasing power to weaken

Layoffs and new unemployment have been issues facing Indonesia for several years. Their impact on the economy is also significant. Therefore, the government is being urged to maintain middle-class purchasing power by providing additional income.

This additional income can be provided through job creation, both domestically and internationally. "Given the complexity of the problem, the government must be hands-on and intervene. Furthermore, it must employ a comprehensive and integrated policy approach. Trade, industrial, fiscal, investment, and sectoral policies must be implemented to stimulate production and demand," explained Hendri.

One example and clear evidence of the government's inability to create jobs is the resurgence of the hashtag #Kaburajadulu. Hendri believes that, instead of being anti-criticism and turning a deaf ear, the government should introduce solutions.

Young people, Hendri said, need jobs. The government should be able to facilitate this by providing information and establishing databases so that the younger generation has opportunities to find employment and improve their quality of life.

"Besides countries like Japan, Hong Kong, Taiwan, and South Korea, Indonesia has AEC cooperation within ASEAN that hasn't been maximized to encourage the free flow of labor abroad. Of course, there are many other ways to do this," Hendri explained.

SOURCE: Metro TV

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