Debatable decree effective for labor protection

JAKARTA (JP): The government again reiterated that Ministerial Decree No. 150/2000 on compensation for dismissed or resigning employees, would not be repealed despite displeasure from investors.

Officials defended their decision saying that empirical data shows that despite its brief lifespan the decree has already been effective in providing protection for workers against arbitrary dismissals.

Tianggur Sinaga, spokeswoman for the Ministry of Manpower and Transmigration, further dismissed the view that the decree only encouraged workers to commit violations in their work place so they would be sacked.

Tianggur argued that a labor analysis showing that the provision of compensation required by the ministerial decree would provoke workers to commit violations in order to be dismissed, was baseless.

She said that based on the ministry's evaluation, the number of dismissals before the decree took effect on June 20 was higher than after its enforcement.

Labor dismissal cases between July 1999 and February 2000 and after the decree came into effect between July 2000 and February 2001 were relatively the same with 2,448 and 2,444 cases respectively.

However the number of dismissed workers between July 2000 and February 2001 was 79,117, compared to 40,298 between July 1999 and February 2000.

What rose significantly was the compensation paid out which doubled in amount.

"The compensation paid to dismissed workers between 2000 and 2001 reached Rp 88.986 billion while the compensation during the previous period was only Rp 44.157 billion," she said.

Despite objections from the Indonesian Employers Association (Apindo) and numerous foreign investors, these protests should not be used as a justification for employers to be excluded from abiding by the decree.

It was issued by former manpower minister Bomer Pasaribu to replace a 1996 decree on severance pay.

The decree stipulates that companies after gaining permission from the Committee for Settlement of Labor Disputes (P4) can dismiss an employee but must provide severance payment and a merit or service payment to the dismissed worker.

Severance pay ranges from 100 percent of the gross monthly wage to 600 percent depending on employment length.

Gross monthly wages consist of the basic salary along with housing, health and food allowances.

Service or merit payment varies. The decree states that those who have worked between three and six years get 200 percent of their gross monthly salary.

The scale continues on up to those who have worked for 24 years or more receiving 1,000 percent of their gross monthly salary.

Workers who resign or retire are only entitled to receive service or merit payment. Workers dismissed due to an occupational mistake they committed are still entitled to service payment.(rms)