Industrial action for higher wages likely: Observers

Ridwan Max Sijabat, The Jakarta Post, Jakarta

Labor activists and observers predict that more state enterprises will be threatened with massive strikes since most of their staff are underpaid.

Federation of State Enterprises' Trade Unions (Federasi SP BUMN) chairman Abdul Azis Hasan said strikes were seen as the last resort to force the government to improve the employees' remuneration standard, which is lower than that of civil servants.

"After employees of several state-owned companies (threatened to) walk off their jobs recently, PT Pelni workers are likely to follow suit because the sea transportation firm can no longer compete with airline companies," Abdul said on Thursday.

He underlined that labor unions in state enterprises had grown stronger amid the reform euphoria, which made employees much more aware of their rights.

Most state enterprises do not comply with core labor standards in accordance with the Labor Law. Of 158 state enterprises, only 60 percent or 94 companies have adopted a collective labor agreement with their management, Abdul said.

"A series of threatened strikes involving employees of aircraft maker PT Dirgantara Indonesia, railway company PT KAI, national flag carrier Garuda Indonesia and oil and gas firm Pertamina reflect not only mismanagement and inefficiency, but also the government's violation of core labor standards," he said.

Separately, International Transport Federation (ITF) country representative Hanafi Rustandi said that state enterprises in the transportation sector had lost out to private competitors because of mismanagement and inefficiency.

"Garuda, Merpati, KAI, Pelni and Damri are not competitive because of severe financial difficulties and rampant corruption which has led to inefficiency," he said.

State enterprises, he added, had long served as cash cows for the government and ruling political parties, making them unable to improve their employees' welfare.

Hanafi and Abdul both said that poor labor conditions were a time bomb that could explode at any time if no radical measures were taken to improve the companies' performance.

The coordinator of BUMN Watch, Naldi Nazar Haroen, said the government's failure to take bold measures against inefficiency and corruption would result in many state enterprises collapsing in coming years.

"Most state enterprises remain unhealthy since they have been subordinated to technical departments controlled by politicians. The companies will continue functioning as money machines for the bureaucracy and ruling parties," he said.

A recent BUMN Watch study revealed that only 15 of the 158 state enterprises had booked annual profits over the last few years. Of the profitable firms, only a few have adequately improved their employees' welfare.

Naldi said that to boost profits, the enterprises should first of all be divided into profit-oriented and public service- oriented ones. Learning from Malaysia, the companies should be overseen by a holding company chaired by a professional, instead of a minister.

"Profit-oriented companies have to develop professional modern managements and be required to meet certain targets," he said.

Under such a structure, Malaysian state enterprises contribute to 85 percent of the country's annual state budget.

State enterprises in Indonesia control Rp 1.158 trillion in total assets, but contribute only 2 percent or Rp 23 trillion annually to the state budget, Naldi said.