Civil servants to get 30 percent pay increase

JAKARTA (JP): The government reached agreement on Tuesday with the House of Representatives budget committee to raise the salary of government employees, police and the military by 30 percent in the April-December 2000 state budget, legislator Aberson Marle Sihaloho said.

Aberson said that the salary increase would be made in two stages during the budget year because of the government's limited financial capability.

"We have agreed in principle to raise the salary by 30 percent," he told reporters following a closed door meeting.

At present, the base salary of an unmarried civil servant of the lowest wrung amounts to Rp 141,800 (US$19.16) a month).

He added that the government also agreed to raise the special allowance of paramedics, teachers, and policemen by an additional 100 percent.

The government proposed in January Rp 45.7 trillion for total personnel pays under the assumption that civil servants' salaries would be raised by 20 percent.

The government maintains that the salary increase would help reduce the rampant corruption in the country's bureaucracy.

Aberson said that the salary increase was also expected to help raise the purchasing power of the estimated 4.5 million civil servants after the government decided to raise fuel prices by an average 12 percent, and electricity tariff by 29 percent.

The House is scheduled to approve the 2000 state budget on Thursday.

The government earlier agreed to raise tax revenues, privatization proceeds, oil revenue target in a bid to help finance the various government subsidy spendings and the raise in the salary of government employees.

But the higher revenue target raises some concerns among economists on whether the government can meet the target amid the current economic and political conditions.

Legislators earlier demanded a much higher increase in the salary of civil servants, pointing out that it was unfair to provide a hefty Rp 42.3 trillion to finance the interest costs of government bank recapitalization bonds.

Deputy of the House budget committee Abdullah Zainie said on Tuesday that legislators wanted the government to lower the bank recapitalization cost in the 2000 budget to Rp 31 trillion, from Rp 42.3 trillion originally planned, to ease budgetary pressures.

Abdullah said that the interest costs of the bank recapitalization bonds to be paid by the government this year would total only Rp 31 trillion.

He said that the other Rp 11 trillion earlier proposed by the government to pay for the interest costs of the bonds for recapitalizing Bank Rakyat Indonesia, Bank Tabungan Negara, Bank Niaga and Bank Danamon plus eight other banks would not be included in the April-December budget as the bonds have yet to be issued.

The government has issued bonds worth more than Rp 282 trillion to help recapitalize several banks in order to lift their capital adequacy ratio to the minimum 4 percent requirement. Instead of injecting fresh cash, the government provided bonds which are tradable in the secondary market.

Recapitalizing the banking sector is seen as a key to reviving the country's ailing economy. (rei)