A favorite topic of mine this one! Unless Indonesia makes some very drastic changes very quickly to the manpower laws they will see a mass reduction in Manufacturing as the MNC head to India, China and Vietman.
While it may seem Indonesia has cheap labor .. the costs of employment here can be high given the number of actual working days and expectations of the workforce on company benefits.
This year employers will be paying a minimum of 13 months salary as well as providing medical insurance for their employee and their family (up to 3 children is standard). However of the 366 days available in 2008 104 days fall on the weekend, we have 15 public holidays, 8 mass leave days and most people will then have an additional 12 days annual leave. This gives employers 227 effective working days this year.
The cost and confusion surrounding the termination of employees in this country puts a lot of companies off expanding operations here. I fail to understand why it is so hard for a company to terminate staff for stealing, graft or just plain under performing. The laws need to change quickly to offer a more balanced approach to labor laws instead of the overprotective system that is currently in place.
Thu, 17 Jan 2008
JP/SBY hasn't set deadline for issuing the severance law
JAKARTA (JP): President Susilo Bambang Yudhoyono refused Wednesday to set a deadline for the issuance of the controversial government regulation on dismissal benefits.
"I haven't set a date ... but it will be issued soon," he told a press conference after chairing a cabinet meeting at the Ministry of Manpower and Transmigration in South Jakarta.
Yudhoyono has been holding off signing the draft since the end of last year.
"The draft is in its final stages," he said.
Once issued, all aspects of the draft will be in accordance with the laws of both central and regional governments.
The government has said it is being careful in issuing the regulation, so as not to violate other laws or regulations.
The draft regulation on dismissal benefits was prepared to help employers better comply with the labor laws, but has been criticized by employers and labor unions for overlapping existing regulations and reducing protection rights for dismissed workers.
The latest draft stipulates that employers must pay 3 percent of workers' monthly salaries into a labor dismissal benefit program, to protect workers with monthly incomes of up to Rp 5.5 million (US$581). Previously, the regulation had stipulated that employers pay only 2 percent severance payment which was opposed by most workers. (rff)
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