KPC workers strike, minister angry

KPC workers strike, minister angry

Evi Mariani, The Jakarta Post, Jakarta

After resuming work for about three hours on Wednesday
morning, about 2,300 workers of East Kalimantan-based PT Kaltim
Prima Coal (KPC) went on strike again, angering many parties,
including the government.

Minister of Manpower and Transmigration Jacob Nuwa Wea, who
generally sides with workers in industrial disputes, dismissed
the strike as illegal.

"If the workers still refuse to return to work despite calls
from the management, the management can fire them. I will support
such a decision," Nuwa Wea told reporters.

The workers went on strike again after learning that they
might face sanctions due their earlier action, and that the
management might cut their bonuses.

Chaerullah, secretary of the team representing the workers
told The Jakarta Post late on Wednesday that the workers rejected
the sanctions and bonus cuts, because these contradicted the
previous agreements established between the workers and the
management.

He said that during the meeting on Tuesday in Kutai regency,
the KPC management had agreed not to impose sanctions on the
workers, while the workers agreed to the US$6 million "goodwill
payment" offered by the firm.

However, on Wednesday morning, the workers received a letter
from the management stating it would impose sanctions on workers
who had failed to return to work as of Sept. 12 and informing
them the goodwill payment was subject to income tax.

"The regent of Kutai Timur is now in Jakarta to find out more
about the letter," he said. "We (the striking workers) have
gathered here at headquarters and are awaiting news," he said.

Chaerullah said the workers would go back to work if they
found the management's explanation satisfactory.

The workers initially went on strike on Aug. 29, demanding a
bonus from company shareholders Rio Tinto Indonesia and BP PLC in
the wake of their decision to sell their combined stake in the
firm to PT Bumi Resources for $500 million. Bumi Resources is
reportedly trying to obtain funds from foreign lenders --
including a Singaporean bank -- to finance the acquisition, but
there has been speculation that it might not be able to get the
funds.

In the beginning, the workers demanded a bonus amounting to 15
percent of the acquisition deal, but during negotiations, they
kept lowering their demand until they finally accepted the $6
million offered by the management.

The workers maintained they had a strong reason to demand the
bonus, as they had been working hard to build the firm and
generate profit for the shareholders.

However, the argument was rejected by many parties, including
Nuwa Wea, who insisted that there was no legal basis for the
workers to ask for a bonus from the sale of the company.

The business community also said the strike would set a bad
precedent that would aggravate the country's legal uncertainties,
worsen the investment climate and scare away foreign investors.

The KPC management has repeatedly insisted that the strike was
illegal, but said it was still willing to meet the workers'
demand for a bonus as a show of goodwill.

Because of the strike, KPC temporarily halted production, as
most of the striking employees were from that division. The
strike reportedly caused an estimated daily loss of $500,000 and
prompted the company to declare force majeure on its obligation
to buyers last week.

The government has reportedly lost Rp 17 billion ($2 million)
in potential royalty revenues due to the strike.