Firms face dilemmas over survival

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.