VP agrees to let Jamsostek handle workers' severance pay

Jakarta (Antara News) - Vice President Jusuf Kalla has agreed to a proposal that the severance pay of laid-off workers be paid by state-owned workers` insurance company PT Jamsostek with the understanding that employers increase their premium payments to PT Jamsostek.

"A new formula on provision of severance pay is being sought through Law No.3/1992 (on PT Jamsostek). Eventually laid-off workers will get their severance pay from PT Jamsostek but employers must increase their premium contributions," Rekson Silaban, chairman of the Indonesian Prosperous Labor Union (KSBSI), said after a meeting with the vice president here on Thursday.

Rekson said the vice president agreed with the idea of workers` severance pay being handled by PT Jamsostek as long as the workers would not be disadvantaged.

At present, employers are required to pay 11.7 percent of premium contributions from the workers` basic salary to PT Jamsostek compared to 20-25 percent in several other ASEAN countries.

Rekson said if the contributions were raised to about 20 percent, they could be used to pay workers` severance pay when they were laid off any time.

During the meeting with the vice president the KSBSI chairman also called on the government to set up a National Contract Point with advanced states grouped in the OECD to avoid fraudulent business practices.

"Indonesia has to set up a national contract point immediately to prevent fraudulent business practices," Rekson said.

He said the absence of a contract point would cause difficulties when a foreign investor fled the country. Indonesia would face problems arresting the fleeing investor because it did not have a national contract point.

Rekson said a number of countries had contract points so that investors of nations grouped in the OECD could not engage in fraudulent practices.

Last year, two footwear factories belonging to South Korean investors, namely PT Dong Joe and PT Spotec, halted their operations in Indonesia because of financial difficulties and shortage of raw materials.(*)
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