Cigarette jobs set to go up in smoke
Cigarette jobs set to go up in smoke
JAKARTA (JP): A union leader raised alarms that 11.5 million
people may lose their jobs when a planned increase in the price
of cigarettes takes effect on April 1.
Bomer Pasaribu, deputy chairman of the All-Indonesia Workers
Union Federation (FSPSI), also said on Saturday that estimates
predicting that the 12.8 percent of the country's 91.7 million
strong labor force will be adversely affected as the result of
the planned hike, was an in fact an "optimistic" scenario.
"Our worst-case scenario estimates that 14.5 percent of 91.7
million people may lose their employments," Bomer, who also heads
the Center for Labor and Development Studies, said.
Bomer did not say whether the 11.5 million also included
tobacco farmers or cigarette vendors.
Last year, the Indonesian labor force numbered 88.2 million,
according to official data.
A decree issued by the Directorate General of Customs and
Excise earlier this month will cause the retail price of
cigarettes to rise by up to 120 percent from April 1.
It stipulates that the retail price of machine-rolled clove
cigarettes produced by companies with a production capacity of
five billion cigarettes per year must rise from last years price
of Rp 95 per cigarette to Rp 175 per cigarette in 1998.
Bomer said that earlier estimates suggesting that only 75,000
workers would be laid off from 330 small-scale cigarette
factories as a result of the decree "would only cover workers
from one regency."
Bomer added that the labor union, in anticipation of the
crisis, submitted a proposal for "eight emergency programs" to
the government last September. The programs are designed to
tackle grassroots unemployment, poverty, and the food and
medicine shortages.
Other proposals for company reform submitted by the union
include cutting managerial salaries, which Bomer said could
prevent even more lay offs.
"We have suggested that president directors of Indonesian
cigarette companies should cut their salaries by 25 to 30
percent, like the CEOs and managers of Bakrie corporation have
done."
Bomer warned that without such measures, unrest and a rise in
crime could result.
"An estimated 48 million workers are already living below the
poverty-line. Just imagine how that figure will increase when
cigarette workers are laid off," Bomer said.
Bomer added that he and other SPSI leaders met last week with
officials from the International Monetary Fund, the International
Labor Organization and the World Trade Organization to discuss
the expected effects of the decree.
Trade union leaders from Australia, Britain and France have
also offered technical assistance to the FSPSI.
Earlier this month, HM Sampoerna Group said that PT Sampoerna,
which produces Dji Sam Soe and Sampoerna Mild cigarettes, had no
plans to lay off any of its 33,000 workers, despite the planned
increase in prices and an expected "slight" decline in sales.
Bomer added that labor only accounted for 5 percent of total
production costs, while costs associated with "corruption,
collusion, rent-seeking and monopoly" reached as high as 15 to 20
percent.
The cigarette industry has so far laid off 700,000 FSPSI
members and 4 million non-members due to the monetary crisis, he
said.
Last month unemployment in the country rose to 8.7 million,
while the number of people working less than 35 hours a week rose
to 18.4 million. (02)