Union wants Social Security Law enforced

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)