Civil servants to get 30 percent pay increase

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)