Thu, 25 Mar 1999

Bank owners urge IBRA negotiates with employees

JAKARTA (JP): Owners of the 38 banks closed by the government urged the Indonesian Bank Restructuring Agency (IBRA) to represent them in negotiations with thousands of employees demanding higher severance pay.

Remy & Darus law firm, which was appointed legal adviser for the bank owners, also said on Wednesday the bank owners, because the financial difficulties they were facing, asked the agency to pay bank employees their severance pay, saying the agency could add the payments to their banks' liabilities.

"The ex-bank owners and management want to be on the same boat with IBRA with the latter as captain," lawyer Remy Sjahdeini said.

He said the demand for IBRA to represent the ex-bank owners in dealing with the employees' demands for higher severance pay was based on juridical facts, particularly Presidential Decree No. 34/1998 which stipulates IBRA has the authority to decide the level of compensation for laid-off bank employees.

He added that based on a ruling issued by the agency on March 13, the ex-bank owners were barred from entering their banks without IBRA permission.

The government closed 38 banks on March 13 in a bid to restructure the country's ailing banking industry. The closures could lead to more than 17,000 bank employees being fired.

IBRA decided to provide the employees severance pay twice the amount stipulated in Minister of Manpower Decree No. 3/1996. In addition, the employees also are entitled to merit pay, particularly those employees who have worked at a bank for more than five years.

However, many bank employees rejected the proposal. They organized protests demanding severance pay at least 10 times higher than that stipulated in the manpower decree.

IBRA deputy chairman Eko S. Budianto said on Tuesday the agency would not alter its initial severance pay proposal, and employees should go to the bank owners not to IBRA for any additional payments.

However, Remy insisted an IBRA-led negotiation would be more effective because it would result in a "once and for all" solution.

He said the bankers would support any decision made by the agency, including an increase in severance pay for the employees.

He stressed, however, that no matter the size of the severance pay, the ex-bank owners appealed to IBRA to prepay the severance pay because the bankers had very limited financial resources.

He said the severance pay, which would initially be paid by IBRA, would be added to the bank owners' liabilities.

He stated the ex-bank owners could understand the need for an increase in the employees severance pay because it would be very difficult for the ex-employees to find new jobs during the current economic crisis.

Analysts, however, said it would not make sense for IBRA to make the severance payments because the banks' liabilities were already much larger than their assets.

They also said if IBRA increased employees severance pay it would set a bad precedent for any possible future layoffs in other industries.

Separately, some 55 representatives of the bank employees met on Wednesday with three members of Golkar's faction in the House of Representatives.

The representatives asked the legislators to fight for their rights and demands for higher severance pay.

"We will discuss this matter with the House of Representative's Commission VIII for finance and the state budget, and we will contact Fahmi Idris, bank owners, bank directors and IBRA," said legislator Ekky Syahruddin.

Fahmi is the Minister of Manpower. (rei/edt)