Pertamina to evaluate decree on workers

Pertamina to evaluate decree on workers

Moch. N. Kurniawan, The Jakarta Post, Jakarta

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said that he had instructed the state-owned oil and gas firm
Pertamina to review a ministerial decree allowing oil and gas
firms to hire temporary workers and keep them on the payroll
indefinitely.

Purnomo said Monday that the results would become input for
the basis on which the government would decide on whether to
revoke or revise the decree.

"I have ordered Pertamina to study the decree," he told
reporters on the sidelines of a ceremony. Pertamina supervises
oil and gas companies operating throughout the country.

The decree in question is Decree No. 5/1995, issued by the
Ministry of Manpower and Transmigration.

Minister of Manpower and Transmigration Jacob Nuwa Wea said
earlier that he planned to rescind the decree and would consult
with Purnomo on the move.

The decree allows oil and gas companies to sign temporary
workers on for a period of up to 20 years. But this contradicts a
more general decree, Decree No. 2/1993, which allows a company to
employ temporary workers for two years and can extend the
contract for another year at the very most.

The plan was well greeted by labor unions, who said it would
help end unjust working conditions for temporary workers.

But Purnomo also warned that the issue must be treated
carefully, so as not to further damage the investment climate in
the country.

"We primarily don't wish to hamper the country's ability to
attract foreign investment," he said.

Oil and gas companies in Indonesia, which are mostly foreign
firms, have invested between US$3 billion and $5 billion per year
over the course of the past few years.

Purnomo said that there were several types of oil firms,
including those which operate in marginal fields and cannot
employ workers on a long-term basis, due to the short life-span
of their operations.

However, he added, some oil companies employ workers based on
long-term contracts because they operate big oil fields.

Pertamina and oil and gas firms have opposed this plan,
arguing that such a policy would make them less efficient, and
could lead to layoffs.

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

To minimize costs, the companies thereby outsource some of
their labor needs.

According to information made available by Pertamina, oil and
gas companies here employ about 17,700 permanent employees and
2,600 temporary workers.