THE LEGAL ASPECT OF REMUNERATION SYSTEM

IN INDONESIAN NATIONAL ARMY

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Definition of Compensation

all forms of financial returns and tangible service and benefits employees receive as part of an

employment relationship.

Forms of return

Compensation Management

ensures that the right people get the right pay for achieving the right objectives in the right way

have a significant role to reach its objective, i.e. efficiency, fairness, compliance, and ethics.

The Legal Aspect of Remuneration System in

Indonesian National Army

Remuneration definition

Indonesian dictionary :gift giving (awards for service, etc); benefit.

Context : realignment of the payroll system that is associated

with the performance appraisal system. integral part of the policy reforms which well

motivated by the awareness of government’s commitment to bring clean and good governance.

Why government need remuneration? (1)

• Poor rated impression:– Poor quality of public service (slow, there is no certainty of

rules/laws, beating the bush, arrogant, have served or feudal style, etc)

– Loaded with the behaviour of corruption, collusion, and nepotism– The low quality of discipline and work ethic of the state

apparatus– Government’s management quality is unproductive, ineffective,

and inefficient– Quality public services that are not accountable and not

transparent

Why government need remuneration? (2)

• Some problems faced:– Salary does not meet the needs for decent living

– Civil servant salaries are less competitive

– Salary does not meet the principal equity because salaries are not linked to

competence and achievement

– Salary structure encourages less motivation to work because of the distance

between the lowest salary and highest salary is too short

– Allowance major structural cause of unhealthy competition

– Less transparent

Legal aspects

• Law No 28/1999 about state organization that is clean and free from corruption

• Law No 43/1999 article 7 about amendments to the law no 8/1974 on personal subjects.

• Law No 17/2007 about the long term National Development Plan 2005-2025.

• Presidential Regulation No 7/2005 about the national medium term development plan

• ILO convention number 100 about equal remuneration for jobs of equal value

Law No 43/1999 Article 7 Paragraph 1

Any civil servants are entitled to a fair and decent wages in accordance with the workload and

responsibilities.

What is meant by a fair and reasonable salary is the salary of civil

servants should be able to meet the needs of family life, so that the servants concerned to focus the mind, and strength just to carry out

the task entrusted to it

Law No 43/1999 Article 7 Paragraph 2

Wages earned by Civil Servants should be able to spur productivity and ensure their welfare

self-explanatory

Law No 43/1999 Article 7 Paragraph 3

Salaries of Civil Servants are just and reasonable as defined in paragraph (1) stipulated by

Government Regulation

Servant setting a fair salary is intended to prevent the welfare gap, both among civil servants and the servants with the private sector. While a decent salary is intended to ensure the fulfilment of basics needs

and to encourage productivity and creativity of Civil Servants.

• Kementerian Keuangan (Kemenkeu)

• Badan Pemeriksa Keuangan (BPK)

• Mahkamah Agung (MA)

2007

• Sekretariat Negara• Sekretariat Kabinet

2009

• Badan Pengkajian dan Penerapan Teknologi

• Lembaga Ketahanan Nasional• Lembaga Administrasi Negara• Lembaga Kebijakan Pengadaan

Barang/Jasa Pemerintah• Kementerian Riset dan Teknologi• Kementerian Perindustrian• Badan Tenaga Nuklir• Badan Pengawas Obat dan

Makanan• Badan Kepegawaian Negara• Badan Koordinasi Penanaman

Modal• Badan Pusat Statistik• Arsip Nasional RI• Badan Kependudukan dan Keluarga

Berencana Nasional• Kementerian Perumahan Rakyat• Kementerian Pemberdayaan

Perempuan dan Perlindungan Anak• Lembaga Sandi Negara• Badan Narkotika Nasional• Kementerian Pertanian.

2012 (soon)33 ministries/institute which implemented remuneration(Based on the priority)

Indonesian National Army Profile

Vision

The realization of a professional military and modern, has a formidable ability to uphold national sovereignty, defend the territorial

integrity of the Unitary Republic of Indonesia and maintain the safety of the nation and the

continuity of national development.

Organizational Structure/Internal Alignment

10 levels

Before remuneration

21 levels

Remuneration system

1. Position analysis

2. Term data collection

3. Job evaluation and Weighting

4. Grading or preparation of a new salary structure.

5. Job pricing or pricing position

6. Proposal pricing ranking and position to the President

 

No Class Title Performance Benefits per Class Title(Rp.)

1 19 29.226.000

2 18 21.649.000

3 17 17.471.000

4 16 12.942.000

5 15 9.586.000

6 14 7.101.000

7 13 5.462.000

8 12 4.202.000

9 11 3.232.000

10 10 2.693.000

11 9 2.245.000

12 8 1.870.000

13 7 1.626.000

14 6 1.414.000

15 5 1.230.000

16 4 1.118.000

17 3 1.016.000

18 2 924.000

19 1 -

After remuneration

Critical ReviewOld System New System

Give less base salary Give more base salaryUnfair compared with private sector Fair compared with private sectorAllowance given is not transparent Allowance given transparent, included

in one-packet salaryDifferential is low Differential is high motivate

employees to perform wellBased on the rank and years of service Based on the value of the job

Conclusion (1)

• Remuneration for Indonesian National Army is regulated by:– Law No 28/1999 (free from KKN)– Law No 43/1999 (a fair and decent wages) – Law No 17/2007 (long term National Development Plan 2005-

2025) – Presidential Regulation No 7/2005 (national medium term

development plan– ILO convention number 100 about (equal remuneration for jobs

of equal value) – President Regulation Number 72/2010 (nominal of total salary)

Conclusion (2)

• The remuneration system for Indonesian National Army is effective to increase employees’ performance and reach the institute’s objective

BIBLIOGRAPHY• http://ekonomi.kompasiana.com. Materi Kuliah Remunerasi. Date access:

7th March 2012• http://remunerasipns.com Date access: 7th March 2012 • http://www.tni.mil.id Date access: 7th March 2012 • Peraturan Pemerintah Republik Indonesia Nomor : 26 Tahun 2010• Peraturan Pemerintah Republik Indonesia Nomor 28 Tahun 2001 Tentang

Peraturan Gaji Anggota Tentara Nasional Indonesia• Peraturan Presiden Republik Indonesia Nomor 72 Tahun 2010 Tentang

Tunjangan Kinerja Pegawai Di Lingkungan Tentara Nasional Indonesia• Undang-Undang Republik Indonesia Nomor 43 Tahun 1999 Tentang

Perubahan Atas Undang-Undang Nomor 8 Tahun 1974 Tentang Pokok-Pokok Kepegawaian

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