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.