Economic Growth Is Up, So Why Are Layoffs Still Happening?

JurnalPost.com - Economic growth is often viewed as a sign that a country's economic condition is improving. When Gross Domestic Product (GDP) rises, production, consumption, and investment activities are generally considered to be developing. However, positive economic growth is not always felt directly by all levels of society, particularly workers.

This condition raises an important question: if the Indonesian economy is growing, why are some workers losing their jobs?

Economic growth can indeed indicate an increase in aggregate economic activity. However, such growth figures do not necessarily reflect the ability of every company to retain its workforce.

Under certain conditions, companies may still face various pressures, such as rising raw material costs, weakening market demand, increasing operational expenses, intensifying competition, and global economic uncertainty. These pressures can force companies to implement efficiency measures to keep their business operations running.

One form of efficiency often implemented is workforce reduction or layoffs. Consequently, national economic growth can occur simultaneously with an increase in layoffs if that growth is not strong enough or sufficiently distributed to create and maintain employment.

Pressures on Industry and the Workforce

This phenomenon is increasingly visible in sectors with high dependence on market conditions, both domestic and global, such as the textile and manufacturing industries.

When demand for products declines while production costs rise, companies face difficult choices. They must decide whether to maintain the number of workers at the cost of high operational expenses or reduce the workforce to ensure the company's financial survival.

From a company's perspective, layoffs can be seen as a step to cut costs and maintain business continuity. However, from the workers' perspective, this decision has far greater consequences.

Losing a job means the loss of a primary source of income for some households. This condition can also increase family economic uncertainty, lower purchasing power, and ultimately affect broader community economic activity.

This demonstrates that positive economic growth figures do not necessarily reflect the same conditions for all members of society.

Economic Growth Needs to Be More Inclusive

The success of economic growth should not be measured solely by how high the GDP growth figure is. It is equally important to see the extent to which that growth is capable of creating decent jobs, retaining the workforce, and improving public welfare.

High economic growth accompanied by waves of layoffs warrants attention. Such a condition may indicate that the benefits of economic growth have not been fully distributed to the workforce.

In other words, the quality of economic growth is also important to consider. Good growth does not just produce an increase in production value, but also enables the public to participate in economic activities and reap the benefits of that growth.

The government plays a crucial role in ensuring that economic growth is inclusive. Policies to maintain public purchasing power, strengthen domestic industries, encourage productive investment, increase company productivity, and provide protection for workers must be implemented simultaneously.

Furthermore, improving workforce competency is becoming increasingly important amidst technological changes and industrial needs. Training programs, vocational education, and skills development can help workers adapt to the changing world of work and increase their chances of securing new employment.

Looking Beyond Growth Figures

Ultimately, the question “economic growth is up, why are layoffs still happening?” cannot be answered by looking at a single economic indicator.

Economic growth describes the overall economic condition, whereas layoffs can occur due to more specific issues at the company or industrial sector level. Therefore, the economy can continue to grow even while some companies face pressure and reduce their workforce.

This phenomenon shows a gap between aggregate economic growth and the real conditions in the labor market.

The challenge of economic development is not just to make growth figures higher, but to ensure that such growth is capable of creating jobs, maintaining business continuity, increasing productivity, and providing tangible benefits to the community.

Thus, quality economic growth should not only be visible in statistical reports but also felt through the availability of decent work and improved public welfare.