Layoffs loom on plan to revoke oil worker decree

Layoffs loom on plan to revoke oil worker decree

Moch. N. Kurniawan, The Jakarta Post, Jakarta

Executives at foreign oil firms warned the Indonesian
government against revoking a decree that allows them to retain
temporary workers for an indefinite period, saying revoking the
decree would increase costs and could lead to layoffs.

The president of U.S.-based PT Caltex Pacific Indonesia,
Humayunbosha, said canceling the decree would burden oil firms
with expenditures not related to their core business.

"This situation will force oil and gas firms to slash their
workforces to offset the increase in expenditures," he told The
Jakarta Post over the weekend.

Last week, Minister of Manpower and Transmigration Jacob Nua
Wea suggested revoking Ministerial Decree No. 5/1995 on temporary
workers at oil and gas companies.

The decree allows oil and gas firms to employ workers on a
temporary basis over a virtually indefinite period, a situation
which Jacob said stripped workers of their respect as human
beings.

Under a previous 1993 decree, oil and gas firms could employ
people as temporary workers for two years, plus a one year
contract extension.

The Indonesian Prosperous Trade Union (SBSI) has lambasted oil
firms and their subcontractors for using the 1995 decree to
prevent workers from gaining permanent employment status.

But Pertamina and foreign oil firms oppose a revocation of the
decree, contending such a move would make the oil industry less
efficient.

"It will hinder investment because it would makes companies
less competitive," Humayunbosha said.

Oil companies face a high failure risk during the exploration
stage, a stage which is marked by huge capital expenditures.

To minimize costs, the companies, as is often the case within
the manufacturing and service sector, outsource some of the work
to subcontractors.

According to data from Pertamina, oil and gas companies here
employ approximately 17,700 permanent workers and 2,600 temporary
employees.

But permanent workers hired by subcontractors reportedly
outnumber those employed directly by the oil and gas companies.

Caltex data shows that its subcontractors have 23,000
permanent workers, as compared to 6,500 employed by Caltex.

According to the company, it granted all of its workers
permanent status last November. But only after a string of
protests which disrupted production several times.

U.S.-based ExxonMobil Oil Indonesia Inc. employs some 1,250
employees, of which only 360 are temporary.

The company's subcontractors reportedly have over 2,400
workers, but their status is unknown.

According to Humayunbosha, there is no quick solution to the
problem of temporary workers, and revoking the decree could
backfire by leading to layoffs.

The corporate executive at American oil and gas firm VICO
Indonesia, Hasanuddin, agreed with Humayunbosha, but admitted
that the 1995 decree put workers at a disadvantage.

"I understand Pak Jacob's concerns, as what he fears is
happening," he said.

But Hasanuddin suggested that before revoking the decree,
Jacob first consult with oil and gas companies to try and reach a
compromise.