Wed, 24 Mar 1999

IBRA balks at demand for higher severance payments

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) again refused on Tuesday demands for higher severance payments for employees of the 38 closed banks, despite further protests.

IBRA deputy chairman Eko S. Budianto said the government's decision to give the closed bank employees severance payments double the amount stipulated in the Minister of Manpower Decree No. 3/1996 was final.

"We will not back off. There's no need to revise the decision. It applies to all of the bank employees," he told reporters at a joint press conference with several members of the House of Representatives Commission VIII on finance and the state budget.

The government closed down 38 banks on March 13 as part of the massive restructuring in the country's messy banking industry. The closures have caused at least 17,000 bank workers to lose their jobs.

Based on the Minister of Manpower Decree, employees who worked for less than one year would receive one month's salary as severance pay, while those having worked for four years or longer would be entitled to 5 months' salary.

In addition to that, the employees are also entitled to merit allowances, particularly for those working for more than five years.

IBRA said the severance payments given to the redundant workers would be double the compensation allowances stipulated in the Minister of Manpower Decree.

But the employees have demanded that IBRA provide up to 10 times the amounts stipulated in the decree. They insisted the that agency put pressure on the bank owners to make up the difference in the increased severance payments.

"We don't have the authority to do that," Eko said, adding that IBRA could only appeal to the bank owners to provide their former employees with extra payments in addition to the government severance allowance.

He also said the government would not provide bailout cash for the bank owners to meet the severance pay demands.

"If we provide the money then the people will think that we're spoiling the conglomerates once again," he said, adding that it would be a bad precedent for other economic sectors which might also face layoffs.

"But we're not policy makers. We're just executors (of the policies)," he said.

Meanwhile, about 700 employees of 10 closed banks marched from the Indonesian Bank Restructuring Agency office on Jl. Jend. Sudirman to the Bank Indonesia building on Jl. MH Thamrin on Tuesday to demand a fair severance payment.

The march, organized by the Indonesian Muslim Workers Union, started at 11 a.m., jamming traffic along the city's main streets.

Carrying banners and posters, the workers demanded a severance payment of between six times and 10 times the government allowance.

They also demanded the government investigate the owners of the closed banks for illegally using the Central Bank's liquidity fund, the workers' spokesman, Deni Danuri, said.

"We will also reveal several ministers who are involved in providing loans which have become bad debts, worth trillions of rupiah, if our demands are not fulfilled," said Deni, who is also chairman of the newly established Banking Crisis Center.

He said the workers complained to IBRA and visited bank owners but have received unsatisfactory responses.

"We also reject an allegation by a lawyer for the owners, Sutan Remy Syahdeni, that we took data from the closed banks," he said.

The protesters are from Bank Tata, Bank Bira, Bank Papan Sejahtera, Bank Orient, Bank Mashill, Bank Sewu, Bank Hastin, Bank Aspac, Bank Arya and Bank Dharmala.

About 20 representatives of the workers were met by Bank Indonesia director Aulia Pohan and lawyer for IBRA, Kemalsyah Siregar, at the central bank building.

In the meeting, the workers, the agency and the central bank finally agreed to invite owners of the 38 closed banks to discuss the severance payment on Thursday.

The angered employees initially created difficulties for depositors in closed banks to withdraw their government guaranteed money as they refused to verify depositors' accounts.

IBRA's Eko, however, said many employees were now more cooperative, with only six banks still refusing to verify accounts.

He said IBRA was planning to employ about 70 percent of the laid-off employees on six-month contracts to assist the agency in assuming control of the assets of the closed banks.

He added that about 20 percent may get permanent jobs at the agency.

He said that other healthier banks were also considering taking over the branches of the closed banks, including some of their employees.

Separately, joint venture insurance firm PT Sewu New York Life announced Tuesday that it planned to recruit former bank employees to be part of its sales team. (rei/jun)