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)