Jamsostek looks to future to improve its image

By Ridwan M. Sijabat

JAKARTA (JP): PT Jamsostek, a state company that operates the only social security insurance policy for workers, has often been in the media spotlight in last eight months.

Most reports have been unflattering, leaving the company with, to say the least, a severely damaged reputation.

Criticism continues to pour in of when, last year, then minister of manpower Abdul Latief used Rp 3.1 billion (US$210,000) of Jamsostek's funds to finance the deliberation of a controversial labor law.

As part of the wave of reform, workers have continuously accused company officials of rampant corruption and are demanding an end to Jamsostek's monopoly in the provision of social security.

Ackmal Husin, who was hastily appointed the company's new president two weeks ago, has spoken to The Jakarta Post to respond to this criticism and the challenges ahead:

Question: What is your response to the allegations of rampant corruption in the company?

Answer: I am against corrupt practices. I'm trying to create a clean management structure and promote a transparent managerial system.

Every year the company's performance is audited by the government audit agency (BPKP) and all its audit results have been followed up with immediate action.

All financial leakages are being thoroughly investigated. Officials and employees found guilty of embezzling the labor fund have been given strict sanctions. This includes some dismissals.

Many employees have been fired for corrupt practices but is it necessary for us to publicize this? Such practices can be found in other companies, government offices and private institutions.

Q: How about the allegation surrounding the construction of the multistory Menara Jamsostek buildings on Jl. Gatot Subroto, South Jakarta, which cost about Rp 360 billion?

A: BPKP has audited the construction project accounts and no deviations have been found. The two towers were built by private companies which had no links to Jamsostek officials, and the tender was offered to the public transparently. Nothing in the project was hidden.

I knew everything about the project because I was director of investment and finance (between 1994 and 1998) when the two towers were built.

The construction has been completed and the towers are ready for rent. A number of companies, including foreign investors, have said they will move to the towers which are strategically located in the business center.

Regarding the land used to construct the towers, South Jakarta district court decided in 1984 that the land belonged to Jamsostek.

However, the Jakarta Prosecutor's Office is also investigating its ownership. We will accept whatever decision is eventually reached.

Q: How about the Rp 3.1 billion taken from the company by former manpower minister Abdul Latief to finance the controversial labor law?

A: Of course, it is true that the company paid Rp 3.1 billion to finance the law's deliberation. But let me tell you that the money was taken not from the funds collected from employers and workers but from the government's participatory share in the company. The government has a Rp 5 billion participatory share from when the company was established in 1976.

Both employers and workers can rest assured that the company has never used the workers' money for unnecessary expenditure, including the company's annual operation costs.

The company's expenditure and operational costs are taken from the profit the company gains from its investments.

The company's assets are Rp 6.1 trillion. A major part of the funds the company has collected from employers and workers has been reinvested in participatory shares in other companies, property, including housing for workers, Bank Indonesia certificates and bank deposits.

Q: What is your reaction to the calls for an end to Jamsostek's monopoly in running social security schemes for workers?

A: Jamsostek does not object to the recent idea aired by Minister of Manpower Fahmi Idris of allowing private companies to run insurance programs for workers.

But first the government must revoke Law No. 3/1992 which stipulates that only Jamsostek is entrusted to run an insurance program for workers.

Second, Jamsostek must be allowed to compete against private companies in giving better services to workers.

However, the government should exercise caution in this matter because changes could create loopholes for employers to avoid participating in such programs for their workers.

Workers should realize that the program is designed to provide them protection at the expense of their employers.

Each worker actually only pays 2 percent of their monthly wage while their employers contribute at least 6.7 percent of their workers' wages per month to the company.

Third, Jamsostek does not object if the government wants it to be managed by a tripartite management representing the government, employers and workers. But first and foremost the law must be amended.

Q: Can you briefly explain how the payment schemes work?

A: According to our data, the company has collected, since its formation in 1976 to December, more than Rp 6.03 trillion from 77,772 companies and 13.3 million workers participating in the social security program which comprises four insurance schemes.

It has paid a total of Rp 393 billion in compensation for insurance claims in the four schemes since the company's establishment in 1976.

Employers, from their own money, contribute monthly between 0.24 percent and 1.74 percent of each worker's wage to the occupational accident program, 3.7 percent to pension funds, 0.3 percent to health programs and between 3 percent and 6 percent for health care insurance programs while workers contribute only 2 percent of their wages for the pension program.

The payment schemes are as follows: After an occupational accident, the company pays between Rp 100,000 and Rp 300,000 for transportation fees. While recuperating the worker also gets one month's salary and his medical fees are reimbursed up to Rp 3 million.

If an employee is handicapped and can no longer work, then the worker will receive 70 percent of 60 times his salary.

In case of death, the worker's family will receive 60 percent of 60 months salary, an additional Rp 1 million compensation and Rp 200,000 to cover burial fees.

The pension plan applies for those retiring at the age of 55 or prematurely, as long as the worker has participated in Jamsostek for five years. They will receive a pension which amounts to their total contribution to the company plus 10 percent interest.

Q: What is your vision for the company's future development?

A: My obsession is to make Jamsostek a strong company that plays a pivotal role in the stock exchange.

As in other countries, we want Jamsostek to be a credible financial institution whose strength lies in productive workers.

I want the company to become a more public one run by professional fund managers.

The management will always be open to all criticism and transparent in managing workers' money.