Indra Harsaputra, Surabaya – Up to 800 of the 2,400 employees of the state's largest shipping company PT PAL Indonesia in Surabaya are facing possible dismissal due the financial difficulties it has experienced since 2008.

PT PAL Indonesia decided to give 800 of its employees one day-off every Friday indefinitely, before they were likely be eventually dismissed, PAL Indonesia Worker Union chairman Kartiko Widodo said Wednesday.

Kartiko said the 800 employees were managerial assistant level staff from the technology, finance, design, logistics and equipment divisions.

The decision – which was reached at a 12-hour meeting held Tuesday between the company's board of directors and workers' union – would officially come into effect this week. Kartiko added it was aimed at reducing the operational costs of completing 18 vessel orders by next year.

Of the 18 vessels, nine vessels ordered locally and from abroad must be finished and delivered by the end of this year, while the remaining nine must be completed by 2010, he said.

"However, the company does not guarantee it will (be able to) keep its 800 employees (forever, despite the 18 vessel orders) because the office of the State Minister for State Enterprises is expecting to reduce the number of PT PAL (employees) this year by 1,000," Kartiko said.

State Minister for State Enterprises Sofyan Djalil said last year, as quoted by Antara, that PAL actually had good business prospects, but its management had made a mistake by signing 20 vessel contracts at once at flat prices, despite the US dollar's fluctuating behavior.

Kartiko said the company had actually suffered from financial difficulties since mid 2007, when its 100 best experts resigned after working for the company for five to 10 years, and moved to shipping companies in Malaysia and Singapore with 10 to 15 times higher salaries than they earned from working at PAL Indonesia.

"The company has since lost its competitive advantage over other shipping companies in Malaysia and Singapore," he said.

President director Harsusanto said PAL Indonesia needed to post at least Rp 1.8 trillion in sales every year to break even.

"(But) the fact is our total sales have never been able to reach the target in the past years. (We) have suffered losses instead," he said.

PAL Indonesia posted losses of Rp 443 billion (US$42.97 million) in 2007 and Rp 46 billion in 2008, according to Harsusanto.

The company is unlikely to meet its Rp 6.4 billion profit target this year because it has not received any orders since last year, he said.

He said the company had also asked the government for a total of $60 million in bailout funds, including $45 million the government had pledged last year, to be channeled through state asset management firm PT Perusahaan Pengelola Aset, but had met no response so far.

To help the ailing company and keep workers, Harsusanto said PAL Indonesia had not paid its directors their salary and only paid managers half their salaries in May.