Pessimism over severance pay draft reg

Tuesday, June 26, 2007
The Jakarta Post, Jakarta

The Indonesian Employers Association (Apindo) said Monday it was unlikely that the draft of the government regulation on severance pay would be finished by the end of June.

"We have gone through various negotiations regarding the amount to be paid, but we have yet to reach an agreement on an amount that satisfies all parties," Apindo chairman Sofjan Wanandi told reporters on the sidelines of a workshop.

Sofjan said negotiations among the government, labor unions and employer organizations, as stipulated by the 2003 law on manpower, had repeatedly reached a deadlock due to the range of interpretations among the labor unions about how the payment should be calculated.

"We have repeatedly calculated the severance pay in line with the provision in the 2003 law and we feel that if the draft of the government regulation were to impose more payments on employers, it would be better not to issue any regulation," he said.

Sofjan said that as long as employers were not charged too much, the insurance companies profited and the employees were sufficiently paid, the regulation would be accepted by all parties.

In an effort to make employer organizations stronger and to advocate effectively for a healthy business climate, Apindo, in coordination with the Dutch Employers' Cooperation Programme (DECP), the International Organization of Employers, the International Labor Organization (ILO) Bureau for Employers' Activities and the Turin Training Centre, held a workshop for more than 100 members of Apindo here Monday.

"The employer organizations at the local level lack the skills and experience (needed) to deal with the government and the unions, therefore they need to be open to experiences of other countries in order to compete in a global market," said Sofjan.

Citing a 2007 World Bank Study, in which Indonesia ranked 135 of 175 countries in terms of ease of doing business, Jan Karel Bout, from the DECP, said that employers and business associations in Indonesia needed to make an extra effort to improve the investment climate.

Alan Boulton, the country director of the ILO in Indonesia, said the workshop was a strategic meeting for Apindo at a very crucial time for Indonesia, because it showed recognition of the need to improve economic performance and the business climate.

"One of the examples of good practices is effective cooperation between employers, the government and unions to find solutions and to make progress in a whole range of areas. One of the underlying needs is to be able to speak effectively with one voice on issues," said Alan.

Masri Hasyar, the assistant to the director general of industrial relations and social insurance for labor at the Manpower and Transmigration Ministry, said that many enterprises in Indonesia had failed because they saw employees only as tools for production.

"It is important nowadays to build a more egalitarian corporate culture. Manpower policies should promote the viability of enterprises and create an environment favorable to enterprise development and job creation," said Hasyar. (02)