Wednesday, June 13, 2007

SBY wants new severance pay program

National News - April 12, 2007

M. Taufiqurrahman, The Jakarta Post, Jakarta

The government has announced plans to allow insurance companies to take part in providing severance pay to workers.

Manpower and Transmigration Minister Erman Suparno said Wednesday that the government was drawing up a regulation that would allow the participation of private companies in providing payments to laid-off workers.

"Apart from state-owned insurance company PT Jamsostek, whose participation in the program is mandated by a 1992 law on social security, we want multiple providers in the program and we are preparing a government regulation for that," Erman told reporters.

Erman and Industry Minister Fahmi Idris met President Susilo Bambang Yudhoyono on Tuesday to deliver a progress report on the tripartite discussions on the new regulation.

In the meeting, Yudhoyono called on all sides in the talks to quickly decide on a scheme that would be beneficial to the country's workers.

Government officials, along with workers' representatives and employers are taking part in the talks.

Erman said that the new scheme would supplement the existing plan, which covers health, accident, death and pension funds.

The minister earlier said that no private companies would be able to manage the new dismissal benefit as the government had entrusted PT Jamsostek to ensure job security among workers.

Vice President Jusuf Kalla have said that the government could privatize the planned scheme.

Indonesia has the second highest retrenchment costs in Asia, after Sri Lanka.

Companies in Indonesia have to pay 32 months of wages to fire workers employed for 20 years or more.

In Sri Lanka, employers have to pay severance equivalent to 46 months of salary.

In China, employers are required to pay a month's salary for every year of work.

An official with PT Jamsostek earlier proposed that the dismissal benefit program should only cover workers with monthly wages of less than Rp 2 million (US$219.6).

Data from the Central Statistics Agency says that 97 percent of the country's labor force were paid less than Rp 2 million per month.

The government's efforts to amend the 2003 Labor Law, including severance pay plans, have met with resistance from labor unions, which say they would deprive workers of many of their rights.

The protests have prompted Yudhoyono to ask academics from five state colleges to assess the labor law.

Their preliminary report has said that severance pay in Indonesia is too high and needs to be cut.


Blogger Socrates Rudy Sirait said...

SBY is trying to reach more voter...
A promise that never be delivered

11:43 PM  

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