Union wants Social Security Law enforced

JAKARTA (JP): The All-Indonesia Workers' Union urged the government yesterday to enforce a 1992 law requiring companies to enroll their workers in a state-owned social security program, saying that firms have already had three years of grace.

Union chairman Imam Sudarwo said he was appalled at the low rate of enrollment of workers in Jamsostek, the social security program managed by the state-owned insurance firm PT Astek.

"We call on PT Astek and the government, in this case the ministry of manpower, to start prosecuting companies which have yet to enroll their employees in Jamsostek," he said.

Under Social Security Law it is the responsibility of management to enroll workers in the social security program.

Although the law was passed by the House of Representatives in 1992, the government has allowed both Astek and companies an indefinite "grace period" for compliance.

Astek, which has a virtual monopoly over workers' insurance, has already conformed with the law by changing its program from Astek (Workers' Insurance) into Jamsostek.

According to Astek, so far only 52,000 companies, employing about 7.7 million workers, have joined the Jamsostek program. The firm says that in 1994 there were over 144,000 companies in Indonesia, employing 30 million fixed-income staff.

The company has been campaigning vigorously over the past year to recruit more companies and workers pending a government decision to end the grace period.

By law, companies that fail to provide social security for their workers can be fined up to Rp 50 million (US$21,800) and their directors can be jailed for up to six months.

Imam said the low enrollment rate was due to the lack of enforcement on the part of the authorities.

He said Astek should be more pro-active in persuading companies to comply with the legislation. "We've not seen any company punished under the law."

Imam added that many companies that have enrolled in the program have not been honest in the information provided to Astek regarding the size of their work forces and the salaries they are paying, chiefly in order to reduce the premiums paid.

The law requires that workers pay a premium of 10 percent of their salaries, seven percent of which is to be contributed by employers, while three percent is deducted from workers' pay. The insurance provided under the program covers work-related accidents, health care, death and pensions.

Imam also cautioned Astek on its management of the huge amount of insurance funds entrusted to it, underlining that the money belongs to the workers. "Astek should bear in mind that the funds come from workers, earned through hard work."

He was responding to questions about Astek's plan to establish industrial joint ventures using the accumulated funds as capital.

The plan, which has already been endorsed by the government, includes establishing joint ventures in the paper and plywood industries, two industries with good prospects which are considered to be "low risk."

Astek currently has over Rp 3.2 trillion ($1.3 billion) of investible funds accumulated from Jamsostek premium payments.

The amount is expected to grow faster in the coming years with more companies enrolling in the social security program. Minister of Manpower Abdul Latief predicted recently that Astek will soon become one of the largest and most modern insurance companies in Asia. (rms)