IBRA urged to settle severance pay issue

JAKARTA (JP): The Indonesian Legal Aid Institute Foundation (YLBHI) has urged the government to immediately settle severance pay demands made by employees of the 38 banks closed down by the government.

YLBHI senior official, Teten Masduki, said in a letter sent to chairman of the Indonesian Bank Restructuring Agency (IBRA) on Monday, that the government had to increase the compensation package because the proposed one was based on 1996 economic conditions.

"There has to be an immediate solution to prevent the bank liquidation process from dragging on," he said.

The government closed down 38 banks on March 13 in a bid to restructure the country's ailing banking industry, making redundant more than 17,000 employees.

Since the closures, the bank employees have been staging demonstrations demanding a higher severance pay than the one proposed by the government.

Their strike has caused difficulties for depositors, whose funds are guaranteed by the government, to withdraw funds from channeling banks, due to an inability to obtain account verifications from bank employees.

Several economists and politicians have supported their demands, urging IBRA to force the bank owners to provide additional redundancy payments for their former employees.

Legislator Paskah Suzetta said that based on the 1998 Banking Law, the government was responsible for settling the severance pay problem.

Secretary General of the Indonesian Banking and Financial Sector Workers Association Saepul Tavip, urged IBRA to force the bank owners to settle the severance pay demand.

Separately, Thomas Suyatno, a chief commissioner at the closed Bank Aspac, said the owners of the 38 banks had appointed banking law expert Remy Sjahdeini, as their representative in any negotiation. (rei)