In response to this trend, Institute for Development of Economics and Finance (INDEF) executive director Tauhid Ahmad predicted that more companies would be laying off their workers, from the fashion to tourism industry as the global and domestic economy are projected to slump.
“I think it will continue because next year’s economy is forecast to slow significantly,” said Tauhid.
According to Tauhid, startup companies are particularly vulnerable to economic downturn as they have to sort out their business to survive. To make his point, he pointed to Grab Indonesia, which closed one of its business units because it was no longer profitable.
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The fierce competition in the gig economy sector is also a factor. With a limited market, many startups in similar business have to fight a price war in order to survive. Another reason, they also offer large compensation to their employees despite stagnant business.
“As a result, they can’t continue to burn money especially for those with limited funding,” he said. (rr)