Celios: The Merah Putih Cooperative Has the Potential to Reduce Employment

The Center of Economic and Law Studies (Celios) has calculated the economic impact of the Merah Putih Village Cooperative program, enacted by the government on Monday, July 21, 2025.

The study shows that the Merah Putih Cooperative program did boost the national economy, but only in the first year. This is due to an additional capital injection of Rp 141.62 trillion channeled by banks in the first year.

In subsequent years, Celios predicts a decline in Gross Domestic Product (GDP) due to opportunity costs and potential financing risks.

"A significant and sustained contraction begins with a Rp 24.01 trillion decrease in the second year, reaching a minus Rp 59.76 trillion in the sixth year," Celios wrote in its report, *The Economic Impact of the Merah Putih Cooperative*.

As a result of the projected GDP decline, job absorption will also decrease.

In the first year of the Merah Putih Cooperative program, Celios' projection is positive, with an increase of 621,800 jobs. This is driven by initial activities such as institutional formation, facility development, and recruitment.

However, from the second to the sixth year, the number of jobs is predicted to sharply decrease. Celios calculates a decrease of up to 497,790 jobs in the sixth year.

Celios assesses that this decline in job absorption reflects the failure of the cooperative business model to generate sustainable economic value.

"Instead of being a solution to unemployment, this program actually creates distortions in the labor market," Celios wrote.