Wednesday, July 04, 2007

Unions oppose severance pay scheme

National News - April 16, 2007

Ridwan Max Sijabat, The Jakarta Post, Jakarta

Labor unions have promised to oppose a government proposal to provide an alternative severance payment scheme that is smaller in amount than required under labor law.

They were responding to a government plan to issue a regulation on a new severance pay scheme, to replace the one outlined in the 2003 Labor Law.

The Confederation of Prosperous Labor Unions (SBSI), the Confederation of All-Indonesian Workers Unions (KSPSI) and the Indonesian Confederation of Trade Unions (ICTU) said the government could not pass a severance payment scheme that paid less than required in the 2003 law.

"The government should drop the plan because it could cause political instability on the eve of Mayday (Labor Day on May 1). The issuance of such a severance payment scheme will certainly spark strong opposition from workers," KSBSI chairman Rekson Silaban told The Jakarta Post on Sunday.

He said if it was worried about businesses, the government should subsidize employers to enable them to make severance payments in accordance with the law.

"The government could use the dividend from state-owned insurance company PT Jamsostek and part of the government's revenue from other state-owned enterprises to help employers make severance payments to dismissed workers," he said.

KSPSI deputy chairman Syukur Sarto said every major union in the country agreed the government's planned severance payment scheme would be bad for fired workers.

"Employers have protested the (2003) law, which requires them to pay dismissed workers up to 32 times their basic salary, because it has been overwhelming for them financially. They would not have that problem if they started saving for severance pay from when they hire workers," he said.

ICTU chairman Bambang Wirahyoso warned the government against stepping on the rights of laid off workers, saying it could have to pay a high political price.

"If the government goes ahead with the plan, millions of workers will take to the streets to protest it this Mayday, as they did last year. If the Labor Law is revised, it means selling Indonesian workers into a new form of slavery in the name of foreign investment," he said.

President Susilo Bambang Yudhoyono said after briefing Manpower and Transmigration Minister Erman Suparno and Industry Ministry Fahmi Idris here last week the government wanted to issue the regulation to prevent employers from being unable to afford to dismiss workers.

Employers have proposed financing a program at PT Jamsostek to cover labor dismissals, on the condition that only workers paid up to Rp 1.500,000 (about US$165) monthly receive severance pay.

Secretary-general of the Indonesian Employers Association (Apindo), Djimanto, said the government had the authority to make an alternative severance payment scheme.

"The (labor) law mandates the government to issue a government regulation on an alternative (severance payment) scheme if employers are found unable to make severance payments as high as required by the law."



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