Fate of employees of liquidated banks

Fate of employees of liquidated banks

From Media Indonesia

In the last few days the media have reported that thousands of
employees of private banks closed on March 13, 1999, have staged
demonstrations at Bank Indonesia (BI) on Jl. Thamrin, the office
of the Indonesian Bank Restructuring Agency (IBRA) on Jl.
Sudirman and the office of the National Development Planning
Board on Jl. Diponegoro.

In the meantime, some 8,000 employees of state banks, which
also have received Bank Indonesia liquidity aid amounting to
trillions of rupiah, have been vying with one another to be laid
off because of the large amount of severance pay they would
receive (the highest amount is Rp 700 million for a Class I
Branch Manager). These two events are really ironic because they
reflect the condition of social justice in Indonesia.

What will be the fate of the some 17,000 employees of the
liquidated banks? How will they feed their families? Many lives
obviously are at stake now. Besides these employees of liquidated
banks, the victim of the bank liquidations is the entire
Indonesian population because the liquidity aid from Bank
Indonesia, trillions of rupiah, is actually the Indonesian
people's money. If this amount were used to eliminate poverty, it
would considerably alleviate poor people's suffering. It is
deplorable that this huge amount of money, extended to both state
and private banks as liquidity aid from Bank Indonesia, only has
enriched business tycoons.

The major mistakes committed by Bank Indonesia as this
country's monetary authority are as follows:

1. Extending liquidity aid to banks managed by irresponsible
bankers.

2. Fully guaranteeing the money of bank customers but not the
fate of some 17,000 employees of liquidated banks. Guaranteeing
the deposits of customers will lead to negative spread, meaning
that the deposit interest rate will be higher than the loan
interest rate. If this condition persists, it will have adverse
impacts on the capital of banks and in turn the capital adequacy
ratio of the banks will become minus. (Both BRI and BNI feel
uneasy receiving the transferred funds from customers of
liquidated banks).

3. No speedy and serious effort has been made to take to court
the owners/management of liquidated banks or miscreant debtors
who have deliberately turned their debts into backlog debts or
gone abroad with the liquidity aid.

Allow me now to call on the government to assume a fair
attitude toward the dismissed bank employees. At least the
government can fulfill 50 percent of their demand; i.e. giving
them five times as much severance pay as stipulated in Article 25
subarticle 1 of Minister of Manpower Regulation No. 3/1996.
Indeed, BI and IBRA are responsible for the consequences of bank
liquidations. If the closed banks had not previously been given
Bank Indonesia liquidity aid they would have gone out of business
naturally without interference from the International Monetary
Fund.

HARRY S. HARYONO

Jakarta