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50 companies ask for downsizing employees

Indonesia Times - November 11, 1997

Jakarta – At least 50 companies have proposed to the government that they can downsize their employees following the unstable economy due to recent monetary crisis.

The 50 companies are predicted to employ around 10 thousand workers. "At least 50 companies at present apply to the Ministry of Manpower to dismiss their workers," director general of manpower development and control of the ministry S. Sianturi said here yesterday.

So far the ministry was still studying why the companies applied for the dismissal, he said, adding that most them argued that their companies were in financial crisis due to recent monetary turmoil.

Four of the applying companies had reduced the amount of shifts applied in their companies from three shifts into two or one, besides asking for the dismissal, he said. Even, one of them had temporarily stopped a number of their workers' activity in the company.

The companies applying to hold the dismissal deal with several fields including textile, shoes, and the most are forestry industries such as sawmill and plywood.

A major policy the companies are proposing is to cut the number of their workers. The measure will increase unemployment rate if the economic uncertainty fails to end.

"I don't dare to say that the dismissal case will increase, but it is possible that a number of companies will propose for similar measures," Sianturi said.

After being controlled, most of the 50 companies applying to hold the dismissal had fired their workers, he said, adding that their sending information to the ministry was just to ask for agreement.

He named 90 pct of the dismissal process as running "smoothly" as there was no protest and demonstration. "Board of directors and workers generally agree the policy which should be taken by the companies."

The agreement was able to be reached as several materials concerning the right of the dismissed workers – including separation pay – could be fulfilled by the companies, he said.

But the ministry hoped that the companies did not directly dismiss their workers, he said, adding that if any time in the future the companies would return normal, the workers should be recruited again. Different from other companies, household goods producer PT Unilever, however, decided to improve its employees' wage amounting to 11 pct. In a meeting last October with its workers, Unilever director Sri Urip also increased the workers' housing payment amounting to 15.5 and health payment 10 pct.

However, Urip admitted that the country's economic uncertainty as well as the rupiah slide-down value against US dollar had affected people's purchasing power, including to buy Unilever's products.