Ethicality of worker contracts in doubt<\/p>\n
Santo Koesoebjono, Economist, Demographer, Wasenaar, The Netherlands<\/p>\n
A worker at a candy factory in Cibinong on the outskirts of
\nJakarta, Uti, said sadly one day that it was the last day of her
\nsix-month contract. It is a common practice among many large
\ncompanies to give short-term contracts.<\/p>\n
The company's policy was a reaction to a government regulation
\nthat stipulates that a worker must be hired as a permanent
\nemployee after working in a company for two years. The regulation
\nalso entitles a worker to severance pay and service payment when
\nhe or she is laid off after a longer period of employment.<\/p>\n
Any well intended government regulation would have negative
\nside effects if not properly implemented, and workers become the
\nvictims. Worse, the bank where the above company opened personal
\naccounts for all employees closed the accounts upon expiration of
\nthe workers' contracts and the workers whose contracts are not
\nrenewed lose their surplus balance.<\/p>\n
By not extending the employment period, after each six-month
\nperiod new recruitment and on-the-job training has to be carried
\nout. Most factory employees are low-skilled workers, with a
\njunior or senior high school diploma. Uti, with a diploma from a
\nstate economics high school (SMEA), like many others also got a
\njob on the assembly line. Although the job is simple, training
\nand supervision are needed during the first weeks.<\/p>\n
Uti, along with another 13 workers on the assembly line,
\nplaces candies in a sachet. At the end of the conveyor belt a
\nsupervisor checks the sachet. To avoid disruptions to the system
\nonly one person is allowed to take a break at a time. This
\nprocess is carried out the whole day. The factory must have a
\nparticular method to select the best among these 14 persons to
\nextend the work contract!<\/p>\n
Besides avoiding providing permanent employment for a worker,
\nthis six-month contract allows the company to assess its
\nprospects. If prospects are good more people will be employed and
\nif prospects are not so good there will be fewer recruits. In
\nmodern economic jargon this is called a flexible labor market.<\/p>\n
It is debatable whether such a policy is appropriate
\nconsidering the repeated process of recruitment and introduction
\nof new workers. It shows the short term orientation of the
\ncompany. Besides, it proves that man has little value. These
\nworkers are disposable. A company is indeed not a social
\ninstitution, but we are now no longer in the primitive industrial
\nsociety of the 19th century and early 20th century Western Europe
\nand America.<\/p>\n
It also demonstrates the weakness of labor unions. Workers
\nremain the underclass of society who may trigger social unrest as
\nhappened in Argentina recently. These workers remain topics for
\nseminars at chic hotels.<\/p>\n
One wonders whether those officials who outlined the above
\ngovernment regulation have looked seriously into its effects.<\/p>\n
One may also wonder whether this short term employment cycle
\nhas any effect on the common economic indicator -- the
\nunemployment rate, if those employed are replacing those laid
\noff. It is even questionable whether such a system has any impact
\non the reduction of the number of people living under the poverty
\nline.<\/p>\n
In northwestern Europe in the 1950s and 1960s foreign workers
\nwere officially recruited for a specific contract period to make
\nup for the labor shortage in the region. In the course of time
\nemployers insisted upon extending contracts because these
\nunskilled foreign workers had become indispensable, even though
\nthey were \"only\" working on the assembly line. They guaranteed a
\ncontinuation of the production process in the long term in the
\neyes of the employers.<\/p>\n
Another surprising practice is that the factory opened a
\npersonal account for its workers including Uti and her colleagues
\nat a bank where their salaries are transferred every month. When
\ntheir contracts expire and these workers are laid off by the
\ncompany the bank closes the personal bank account after a few
\nweeks. The money remaining in this personal account can no longer
\nbe withdrawn and goes to the factory. The money is gone.
\nFortunately, Uti had withdrawn her money before the bank closed
\nher account.<\/p>\n
Are the popularity of short term contracts and the closing of
\nthe personal bank account of laid off workers symptoms of a
\nbreaking down of the economic and financial system and declining
\nadministrative ability of the government? Is it the excesses of
\nan egocentric attitude of \"the haves\"?<\/p>\n
If so, people like Uti are doomed to live in uncertainty and
\npoverty without any future prospects other than a desperate
\nassault on those whom they perceive as the extortioners.<\/p>\n
The company policy ensures that these workers are not in a
\nposition to improve their fate and remain in a situation of
\nuncertainty. This creates feelings of despair, frustration and
\ndiscontent motivating them to join protests.<\/p>\n
Moreover the desperate situation of these workers also creates
\njealousy toward those with an excessive lifestyle. They see these
\npeople arriving every day at the factory in fine clothes and
\nluxury cars.<\/p>\n
Measures need to be taken by the government to guarantee a
\nminimum amount of financial support to workers employed for six
\nmonths and longer. This support should be provided partly by a
\nsocial fund, the capital of which is formed from social security
\npremiums paid by the workers during their employment and by the
\nemployer.<\/p>\n
Financial support from the government should also be made
\navailable as part of its social and economic policy. Also, the
\nemployer should be required by law to give severance payment
\nequivalent to one month's salary when terminating a contract
\nafter six months. This would encourage employers to employ
\nworkers for a longer period. This could provide the opportunity
\nfor workers to develop a career in the company through on-the-job
\ntraining which would result in more experienced workers.<\/p>\n
In the long term such an approach will create a loyal attitude
\ntoward the company, which was once the norm within many Japanese
\ncompanies.<\/p>",
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