Firms face dilemmas over survival
In these hard economic times, employers are wracking their brains and dipping into their accounts to meet obligations to their workers. Right now, these include year-end bonuses, but looming ahead is next year's April deadline for implementation of the minimum regional wage. The Jakarta Post reporters Ahmad Junaidi, Ati Nurbaiti, Arief Suhardiman, Benget Simbolon, Emmy Fitri, Kornelius Purba and Riyadi talked to those affected about what they anticipate in the future. Related stories on Page 11.
JAKARTA (JP): An executive of a large company had begun to breathe a little easier after the management had decided that they would not lay off workers for the time being.
His bubble of security was burst when his secretary walked in.
"There is one of those sumbangan request for donations," she announced.
The executive, who we will call Hadi, braced himself for what lay ahead. Despite the credit crunch, he thought as he read the request letter, people still had the audacity to ask for donations for a golf tournament!
A note from a director general was attached to the letter from a ministry. They added to the pile of similar letters from a governor, a military chief and a secretary-general, among others.
He faced the ministry's messenger with his most polite but apologetic demeanor.
"Please understand... we now have our priorities. The first is being able to keep all our staff, pay them in full, and not cut their Idul Fitri allowance. The amount for a contribution to your ministry's golf tournament could be better spent on achieving this purpose... "
The man nodded in understanding, and left the office.
His reaction might be single small blessing in what looks like an indefinite period of severe tightening of belts and slashing of budgets.
"Usually we could not turn down such requests... now, it's actually easier," said Hadi. "Those asking for such contributions are rather pushy, for instance asking us to buy three seminar tickets for Rp 500,000 (US$100) each."
Rearranging priorities is now a daily exercise among employers nationwide. They have to decide whether year-end bonuses, soon to be followed by Idul Fitri allowances, can be paid or must be cut.
Meanwhile, managers are finding themselves being asked this question: "Would you prefer your salary in full, which could be the last, or would you accept a cut and stay here longer?"
They are hardly spoiled for choice. "Where else would they find work?," said Netty B. Ryanto, the honorary chairwoman of the Indonesian Association of Women Employers.
Union
Coming up is the mandatory annual wage increase in April, the amount still to be negotiated by representatives of the government, the Indonesian Employers' Association (Apindo) and the All-Indonesia Workers Union Federation.
But Bomer Pasaribu, the chair of the federation's representatives in the wage talks, said bewildered federation chapters have yet to make up their minds on the amount of the increase to request.
With skyrocketing prices and the drop in purchasing power of the rupiah, the federation believes there is need for a 12 percent pay increase. "But we must be flexible," he said.
He warned that, above all, Idul Fitri bonuses should be paid in order to avoid labor unrest.
Netty, owner of a hospital and other health facilities, stresses that both sides will have to compromise.
"We understand (workers' predicament)... what with the prices going up. But this is a very difficult time for business. It's not that we disagree with the need for an increase, but we would propose that it should not take place now."
In Bandung, West Java, labor researcher Indrasari Tjandraningsih described as "irrelevant" the talk over the regional minimum wage increase.
"Just forget it," she said.
Aburizal Bakrie, the chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said only firms billing in dollars could probably give a wage increase, bonuses and Idul Fitri allowances today.
Anton J. Supit, the chairman of the Indonesian Footwear Association, Aprisindo, said: "(Managements) are forced to make priorities to survive. And giving bonuses may not be their priority. Even worse, they may have to lay off their employees."
About 100,000 workers of textile plants have been laid off in West Java alone. Bomer estimated unemployment in the construction sector could soon reach two million.
Acknowledging the liquidity problem of local firms, Aburizal said Kadin will negotiate with associations of state and private banks this Tuesday on possible rollover of the troubled companies' debts.
"If banks are willing to roll over their loans ... we expect those companies would be able to meet some of its obligations to their employees," Aburizal said.
Even in the worst case scenario, companies should still make employees their top priority, he added. Financial obligations to government and banks could come second.
Economist Sri Mulyani Indrawati noted households have yet to be really affected because employers are still prioritizing payment of salaries over other expenditures, such as paying debts to suppliers.
But their cash flow may dry up in a few months, she said.
Bomer said the union hopes managements will campaign for efficiency, and set wage cuts and dismissals as the last resort.
He added that executives could set an example by opting to take a pay cut. "They would not starve with a 5 percent to 10 percent cut."
"Cutting the salary of one manager could save the jobs of 50 to 200 workers," he said, adding managers number some two million of the 40 million paid workers here.
"We dare not suggest cutting government officials' pay like in Thailand or Malaysia," Bomer said. "That would only serve to increase the pungli (illegal levies extorted by officials)."
Bomer quoted several businesspeople in describing this additional burden: "Sure we can pay workers their THR (Idul Fitri allowances). What's hard for us is to refuse demands for those other 'bonuses'," referring to payments made to the authorities.
Johannes Tulung, the general manager of the developer of the Telaga Kahuripan housing project in Bogor, West Java, equates efficiency with a streamlined organization.
"With a project area of 750 hectares, we only have 60 employees, while (another company) which has developed 700 hectares has some 600 people," he said. His company prefers to hire extra people from other firms as needed.