Jakarta – Major labor unions will very likely accept the 3-percent severance payment scheme drafted by the government in the regulation on dismissal benefits.
"It is all right if the government decides that employers should pay a 3-percent severance payment but it must be implemented progressively," chairman of the Confederation of Indonesian Prosperous Labor Unions Rekson Silaban told The Jakarta Post on Thursday.
The latest draft of the government regulation on dismissal benefits stipulates that employers must pay 3 percent of workers' monthly salaries into the labor dismissal benefit program to protect workers with monthly incomes of up to Rp 5.5 million (US$586).
According to Manpower Ministry data, currently 99.13 percent of the 26.8 million workers in Indonesia have a maximum monthly income of Rp 5.5 million.
Previously, the regulation only stipulated that employers must pay a 2-percent severance payment, which was opposed by most workers. Further discussion about the scheme has been deadlocked since then.
"That is way less than the actual percentage of the severance payment of 8 percent according to the 2003 Law on Workers," Rekson said.
He added that considering the business climate in Indonesia he could accept the current percentage proposed by employers, but said it must be increased gradually in line with the conditions of the companies.
"If a company can afford to pay 8 percent, then it should fulfill its obligation to its workers," he said.
Chairman of the Confederation of the All Indonesian Workers Unions, Sjukur Sarto, shared the same view as Rekson, saying that as long as the regulation did not violate the law on workers, he would probably accept the offer.
"We previously suggested 8.33 percent for severance payments, but we will see further developments," he said. Secretary general of the Indonesian Employers' Association, Djimanto, said that employers would not increase their current offer.
"We can only afford to pay a 3 percent severance payment with the condition that there will be no extra costs," he said.
So far employers must pay 11 percent of workers' monthly salaries for social, health and pension plans to the state-owned insurance company PT Jamsostek.
Separately, chairman of the United Federation of Worker Unions of State-owned Enterprises, Arief Poyuono, said the union could accept the current percentage for severance payments considering the high-cost economy faced by employers in Indonesia.
"If the government can remove 'the invisible' costs, I'm sure that employers can pay at least 7 percent in severance payments," he told reporters after a seminar on dismissal benefits.
He said he generally considered the regulation as a good start on the part of the government to ensure workers' security. "I just hope that the government will really implement the regulation and not just leave it on paper," he said.
He added that the institution appointed to facilitate the severance payment scheme should be independent and should manage the fund transparently. He also suggested that representatives of both employers and workers must monitor the institution.
Sjukur agreed with Arief, but added that the reason why most employers could not afford to pay their employers severance payments was because they managed the funds themselves.
Arief also expressed his concern regarding the lack of clear and strict punishments for employers who did not fulfill their obligations in the regulation. "That's the reason why many employers prefer to go abroad once their businesses here collapse."
There are currently more than 70,000 workers who have been dismissed and are still waiting for severance payments.