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Sep '06

Government to introduce regulations to reduce labor perks

Following its decision to drop the plan to amend the 2003 Labor Law, the government said it will soon issue a regulation detailing termination procedures and severance payments for workers to give them more job certainty.

Manpower and Transmigration Minister Erman Suparno said the regulation would also detail crucial issues on outsourcing, contract-based workers and other contentious issues.  He said the government would also revise the 1992 law on social security programs to allow state-owned labor insurance company, PT Jamsostek to provide a termination scheme for dismissed workers.

“The government will discuss in detail all these issues with other stakeholders, mainly the labor unions and employers, before issuing the government regulation and revising the social security program law at the House of Representatives,” he was quoted as saying by The Jakarta Post.

Employers on Monday (18/9/06) hailed the planned government regulation, which they said could accommodate aspirations earlier included in the proposed amendments to the labor law.  They also warned the government they would act “unilaterally” if it ignores their aspirations.
Indonesian Employers Association (Apindo) secretary general Djimanto hoped the regulation would amend the nation’s social security system.  “With the severance payment scheme to be handled by PT Jamsostek, employers will have no problems in cases of massive layoffs,” he said.

He said most small and medium companies are labor-intensive and that large layoffs are often unavoidable because of businesses’ dependence on foreign orders.
Djimanto said labor-intensive companies such as shoe, textile and garment factories would continue “rationalizing” their employees, recruiting contract-based workers to reduce their labor costs and outsourcing part of their labor to home industries.  “This is a last resort and we have to do it for survival,” he said.

Chairman of the Confederation of Indonesian Prosperous Labor Unions (KSBSI), Rekson Silaban, said the regulation should not violate the labor law and change long service and severance payments for dismissed workers.
“The regulation should also detail outsourcing, so that it will be clear which jobs outside (a company’s) core business could be outsourced, and the ratio between permanent and non-permanent workers should create job security among workers,” he said.

The unions have also proposed an increase in mandatory employer contributions to social security premiums to at least 20% of workers wages from the current 13% to provide more for workers in retirement.
Silaban said the rise would mirror similar social security programs in Malaysia and Singapore, where employees automatically have 30% to 44% of their salaries paid into the schemes.

Sumber : KKBP-RI

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