Jakarta – The Office of State Enterprises (SOE) Minister pledges no layoffs by its companies this year although the global crisis is worsening.
"The ministry won't allow layoffs of SOE employees because we're optimistic the companies can survive the crisis," secretary to the SOE minister Said Didu said on Friday.
He said that the ministry had given out instructions to its enterprises to avoid layoffs and to seek other alternatives to them when problems arose. "The ministry has instructed SOEs to avoid layoffs but it's up to the companies to search for ways out on how to retain employees," he said.
He said that so far most SOEs have been performing well under the economic crisis despite the ministry's projection of six percent decline in net profits this year.
"If we pay attention to the companies performances, we're still projecting a profit this year although we are in the middle of a crisis and under [the ministry's] decreased profit projection," he said, adding that there was no need for layoffs if SOEs were still in black.
The government is concern that worker dismissal by SOEs may exacerbate the current wave of mass layoffs. Indonesian Employers Association (Apindo) recorded 237,500 workers out of jobs between October and the first week of March.
Currently, there are 139 SOEs, employing around one million workers nationwide. SOEs have been the country's key economic backbone since the late 1998 Asian financial crisis.
Said said earlier the ministry was projecting Rp 70 trillion (US$5.88 billion) in profits this year, down by 6.6 percent compared to last year's Rp 75 trillion.
Falling commodity prices and overseas orders due to the worsening global financial conditions are the main factors behind the reduced projections for SOE profits.
State oil and gas company Pertamina is expected to be the largest contributor to overall SOE profits this year by contributing around Rp 20 trillion, followed by state telecommunications company PT Telkom, Bank Rakyat Indonesia (BRI) and Bank Mandiri.
SOEs operational expenditures for this year have fallen to Rp 836 trillion from last year's Rp 962 trillion, reflecting the downturn.
On the other hand, SOE's capital expenditures this year are expected to rise by around Rp 23 trillion to Rp 152 trillion, reflecting increased budgets and positive investment decisions, partly to help cope with the negative impacts of the global crisis.
The worsening financial crisis has forced most SOEs to revise their production and revenue targets but without any plan to cut headcounts.
The nation's largest steel maker PT Krakatau Steel (KS) has already announced that its revenue would decrease by 16.8 percent this year but it would do its best to avoid layoffs even though the company was struggling with slowing demand.
Dede Rusli, the company's spokesman said earlier that KS would try to avoid layoffs affecting its 5.600 workers by cutting costs and re-scheduling working shifts.
He also said that the company has tried not to reduce employees' take home pay, but only to cut, among other things, health care, travel duty, overtime, and training incentives, in order to reduce costs.
Ailing state airline company PT Merpati Nusantara axed 1,300 of its 2,590 workers last August to help boost efficiency. The government stepped in to save Merpati with a Rp 350 billion cash injection.