SOEs labor union wants stock option facility

SOEs labor union wants stock option facility

Fitri Wulandari, The Jakarta Post, Jakarta Post

The Federation of State-Owned Company Labor Unions (FSP-BUMN) demanded that employees of state-owned enterprises (SOEs) be allowed to own shares in the SOE they work for via a stock option facility so that they can have a role in supervising the SOEs.

Chairman of FSP-BUMN Bambang S. Syukur said on Wednesday that the stock option facility should be included in the bill on SOEs, which is currently being drafted by the government.

"If employees could buy shares in the SOE, we could have representatives on the board of commissioners as supervisors," he told reporters on the sidelines of a seminar on SOEs and privatization.

He said that employees should at least have a 20 percent stake in the SOE they work for to protect their interests, which includes fending off the adverse affects of privatization.

In addition, based on Law No 21/2000 on Labor Union, employees may buy SOE shares.

FSP-BUMN who staged an anti-privatization protest in mid-April said the privatization program would only inflict losses on the country, including massive layoffs.

"There have been cases where the privatization of SOEs has been successful, but many cause trouble, and spark disputes between employees and the company's board of directors," Bambang said, referring to the failed privatization of some SOEs that have met resistance from employees.

For the past three years, the government has been trying to privatize SOEs in a bid to raise more cash for the state budget and improve the poor performance of SOEs.

At present there are more than 160 SOEs in Indonesia. According to a 1997 audit result, more than half are in a weak financial condition. SOEs poor performance was mainly due to inefficiency, poor management and corruption.

However, the government effort to push the privatization program has met opposition from various parties, including SOE employees.

Last year, the government failed to complete the sale of a stake in 16 SOEs that was expected to rake in some Rp 6.5 trillion (US$730 million) to help plug the deficit in the state budget.

Revrisond Baswir, a noted economist of Gajah Mada University, said that giving shares to employees was an important part of restructuring SOEs.

"Giving share ownership to employees will increase their share in supervising SOEs," he said.