Merpati, PPD plan mass dismissals: Minister

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.