Currently employing 6,000 workers, the firm said it would offer mutual termination agreements (MTAs) to effectively reduce its workforce by 1,500.
The government, while acknowledging that Chevron had requested permission for the layoffs, objected to the move and expressed concern about the number of mass terminations occurring in the oil and gas sector.
“We urged [Chevron] to reduce the number of its workers naturally. If there is a retirement plan, then let it happen through that,” I Gusti Nyoman Wiratmaja, director general of oil and gas at the Energy and Mineral Resources Ministry, said in Jakarta on Monday (1 February).
Chevron also faces opposition from the Chevron Indonesia Labour Union. Spokesperson Indra Kurniawan, said that while MTAs are normally subject to the employees’ voluntary agreement, those who reject Chevron’s MTA will be forced to accept compulsory “labour assessment”.
“The labour union has no problem with the MTA, but reassessment is being forced by the company; it’s one sided. An MTA should be offered without coercion,” he told The Jakarta Post
He accused Chevron of violating regulations as it had applied to the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) for approval without first discussing the layoffs with the union.
Indra also said Chevron should have followed eight steps prior to laying off their employees. These were detailed in a Constitutional Court ruling in 2012 which stated that staff could not be terminated for the sole reason of creating a more efficient workforce. Rather, a company would have to be closing down or going bankrupt.
The Court ruled that a firm should instead undergo the following eight steps before layoffs became a viable decision:
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- Reducing wages and benefits for senior staff
- Reducing the number of shifts
- Cutting down on overtime work
- Lowering individual work hours
- Reducing the number of work days
- Granting extended temporary leave to workers
- Not renewing contracts for workers whose contracts have expired
- Offering early retirement and pensions to those suitable
Chevron Pacific Indonesia is facing opposition after announcing layoffs of 25 per cent of its workforce between January and April this year.