Mon, 08 Mar 1999

Govt urged to help staffs of closed banks

JAKARTA (JP): Legislators and economists have urged the government to provide a financial package and technical assistance to workers of insolvent banks facing closure next week.

Paskah Suzetta of the House of Representatives' Commission VIII for state budget and finance said on Saturday the move must be effected immediately through the issuance of a presidential decree stipulating a fund allocation to help employees of the closed banks.

"So far the government has only focused its attention on the assets of the banks which will be liquidated and the recapitalization program of surviving banks," Paskah said on the sidelines of an economics seminar held by the Indonesian Financial Sector Union (IFSU).

"Its concern is mainly to save public funds and the government money that has been spent on those insolvent banks," he said.

The welfare of the dismissed bank workers so far remains uncertain, he said.

The government plans to announce late next week the name of banks qualified to join its recapitalization program, and those which would be closed down due to insolvency.

The announcement was initially scheduled on Feb. 27, but a last minute decision delayed the plan.

Bank Indonesia governor Syahril Sabirin has said that the number of insolvent banks which would be closed down could reach 40.

IFSU has estimated earlier that 25,000 workers in the private banks might face lay off if the government closes down 40 of them.

The government has also announced its plan to lay off some 8,000 of the 26,000 employees of four state banks which would be merged into the newly established Bank Mandiri.

Several other legislators and business analysts have expressed a similar concern. They said a special assistance package should be created to help the dismissed workers.

Economist Hartojo Wignjowijoto decried the government's seeming lack of anticipation of potential labor disputes arising from the massive lay-off after the closures.

"The government should provide funds to retrain those who lost their jobs to help them find jobs in other countries," he said, adding, "there are many countries like Vietnam, where demands for financial industry workers are high."

Meanwhile, the state-owned social insurance company PT Jamsostek said on Thursday it would pay out at least Rp 200 billion (about US$23 million) in old-age benefits to tens of thousands of laid-off casualties of the private and state-owned banks.

"We have allocated about Rp 50 billion for staff of the state- owned banks, and the remaining Rp 150 billion for employees of the private banks which are to be closed down," Jamsostek Director Bambang Purwoko was quoted by Bisnis Indonesia daily as saying.

Every company employing more than six people is required to contribute to Jamsostek 5.7 percent of its worker's basic salary as old-age savings. The employee provides 2 percent of the amount, and the employer the remaining 3.7 percent.

The funds can be disbursed when the employee reaches the age of 55, dies, or is laid off.

IFSU vice Chairman Estian Adrianto said many of the government moves since it began restructuring the banking sector in 1997 had not taken into consideration the welfare of bank employees.

He cited bank mergers, closures and management take-overs by the government.

Since the government first liquidated 16 ailing private banks in late 1997, some 8,000 of the bank employees who lost their jobs had not received sufficient compensation, he said

"The employees were never involved or informed in taking a decisions that affect their lives, either by the government or the management," Estian said.

Last year the government closed down 10 more insolvent private banks and nationalized four ailing private banks. (das)