Merpati, PPD plan mass dismissals: Minister
Ridwan Max Sijabat, The Jakarta Post, Jakarta
A minister revealed on Sunday that state-owned carrier PT Merpati Nusantara Airlines and city-owned bus company Perum Perusahaan Pengangkutan Djakarta (PPD) were set to dismiss thousands of workers in 2006 due to their poor performance.
State Minister of State Enterprises Sugiharto said the mass dismissals were unavoidable and had been discussed between the managers and the workers, as well as with the House of Representatives.
"All the workers with the two state-owned companies and their labor unions have been given detailed information on the mass layoffs and they do realize the companies have performed poorly over the last few years.
"Of the utmost importance is that management will have to pay all obligations to those that will be laid off; in accordance with the manpower laws," he said after presiding over the start of a march to mark the 28th anniversary of state-owned workers' insurance firm PT Jamsostek.
Sugiharto emphasized that the ailing Merpati had decided to ground some aircraft after halting several unprofitable domestic routes.
"The company has several times obtained financial 'injections' from the government, but it has been unable to achieve financial health," he added.
He also said PPD had long been deep in financial crisis, to the point that it had sold many assets just to cover operational expenses.
"A large labor dismissal is the best alternative for time being and PPD management has decided to slash the worker-to-bus ratio. The ratio will be 1:5 after the layoffs, instead of the current 1:12," he said.
He added that the company would eventually be sold and that several domestic investors had expressed interest in acquiring it.
Sugiharto also said that in addition to those two state enterprises, many private companies, especially in the manufacturing sector, had been forced to lay off thousands of workers because of the economic difficulties due to the dramatically rising costs of doing business.
"The government has asked all employers to seek alternatives beside the mass dismissals, because it will mean extensive and negative impacts, not only on the workers but also for the country's economy.
"Large layoffs should be the last resort and employers should coordinate with the manpower ministry before dismissing their workers," he said.
He did not elaborate on the number of the workers from private companies that had lost their jobs.
Asked whether Jamsostek was prepared to pay all the pension benefits and other financial assistance after all these dismissals in 2006, Sugiharto said there would be no problem.
"Jamsostek, with total assets of Rp 35 trillion, is prepared to return all the funds collected under the pension fund benefit program, and it is committed to providing financial assistance to dismissed workers," he said
Separately, Jamsostek's director of operations, Tjarda Muchtar, said more than Rp 1 trillion had been allocated for the dismissed workers, which could reach 2 million next year, due in part to the fuel prices hikes in March and October.
"All the money collected under the pension benefit program from workers is safe and we are ready with more than Rp 1 trillion if the worst-case scenario happens in 2006," he said.