ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
D. EMPLOYEES
The objective of the Nomination and Remuneration Committee is to establish, administer and enforce corporate governance principles in the process of nomination for strategic management positions and the determination of the Board of Directors remuneration. The duties of the Nomination and Remuneration Committee include the following:
• to establish our organizational structure one level below the Board of Directors, with reference to the principles of good corporate governance.
• to assist the Board of Commissioners who are engaged with the Directors in selecting candidates for strategic positions in our Company.
• to give recommendations to the Board of Commissioners to be conveyed to the holder of series A Dwiwarna shares regarding:
- the composition of the Board of Directors.
- candidates for the President Director and President Commissioner of all of Company's subsidiaries.
- candidates for the Board of Directors and Board of Commissioners of our subsidiaries if the relevant subsidiary’s assets or revenues are equal or in excess of 50% of the consolidated assets or consolidated revenues of Telkom, respectively.
• provide recommendations to the Board of Commissioners to be submitted to the General Meeting of Shareholders through the holder of the series A Dwiwarna share concerning the policies, amount and / or structure for the remuneration of the Board of Directors and Board of Commissioners.
• determine remuneration of the Board of Directors and Board of Commissioners in the form of fixed salary or honorarium, allowances and facilities and variable incentives.
• review the employment contract and/or performance statement of each member of the Board of Directors.
Currently, our Nomination and Remuneration Committee consists of seven members (including the chairman and secretary): (i) Marsudi Wahyu Kisworo (Independent Commissioner and Chairman of the Nomination and Remuneration Committee), (ii) Alex Denni (Commissioner), (iii) Ismail (Commissioner), (iv) Marcelino Rumambo Pandin (Commissioner), (v) Rizal Mallarangeng (Commissioner), (vi) Chandra Arie Setiawan (Independent Commissioner) and (vii) Mr Ario Guntoro (Secretary). In the execution of their tasks, members of the Nomination and Remuneration Committee have to act independently.
As of December 31, 2020, we had 296 senior management employees, compared with 310 senior management employees as of December 31, 2019. The total number of middle management employees decreased from 6,377 employees as of December 31, 2019 to 6,130 employees as of December 31, 2020. The number of supervisor level employees decreased from 12,950 employees as of December 31, 2019 to 12,480 employees as of December 31, 2020. Other employees increased from 4,635 employees as of December 31, 2019 to 6,442 employees as of December 31, 2020. We did not employ a significant number of temporary employees in 2020. The following table shows our employee profile by position.
Position As of December 31, 2020
Telkom Subsidiaries Telkom Group Percentage (%)
Senior Management 129 167 296 1.2
Middle Management 3,143 2,987 6,130 24.2
Supervisors 4,928 7,552 12,480 49.2
Others 1,545 4,897 6,442 25.4
Total 9,745 15,603 25,348 100.0
Our employee profile based on educational background as of December 31, 2020 was dominated by university graduates which accounted for 61.3% of our total employees. This reflects our focus on recruiting highly educated candidates with the right qualifications to support our growth. The following table shows our employee profile by educational background.
Level of Education As of December 31, 2020
Telkom Subsidiaries Telkom Group Percentage (%)
Pre University 1,434 1,656 3,090 12.2
Diploma Graduates 1,060 2,583 3,643 14.4
University Graduates 5,470 10,063 15,533 61.3
Post Graduates 1,781 1,301 3,082 12.1
Total 9,745 15,603 25,348 100.0
Digital Talents
We intend to nurture best-in-class digital talents who will be able to help develop our digital capabilities and increase the widespread adoption of digitalization. To reach this goal, we have developed two main strategies.
Our first strategy consists in developing internal digital talents and develop a digital environment and culture.
Our talent development programs and also our corporate culture activation programs are designed to accelerate our transformation into a digital telecommunications company and empower our employees internally by offering training sessions and advice.
Our second strategy consists in acquiring digital capabilities from third parties and create a collaborative ecosystem through partnerships with third parties to further accelerate our transformation into a digital telecommunications company.
As at December 31, 2020, we had identified and developed 1,117 digital talents, including 570 talents sourced internally and 547 talents sourced externally. These digital talents participate in training and development programs and can obtain Telkom certifications delivered internally. In 2020, expenses incurred in connection with our digital training and certification programs amounted to approximately Rp34.5 billion.
Compensation and Benefits
We apply a comprehensive compensation and benefit/reward system which comprises: (i) basic allowances (monthly and non-monthly), including various allowances that may be given in case the employee is located in a disaster or conflict areas, holiday allowances, health, housing and transportation allowances, social security, and pension benefits, (ii) career and development allowances and benefits (training, coaching/mentoring, scholarships, career development opportunities), (iii) performance-based compensation such as sales and marketing incentives and other variable performance-based monetary such as bonuses. Our compensation and benefits policies are stated in a collective labor agreement (Perjanjian Kerja Bersama), which is reviewed every three years.
Retirement Program
The retirement age for all our employees is 56 years. We have two pension schemes: (a) Defined Benefit Pension Plan ("DBPP"), which is applicable to permanent employees who were permanent prior to July 1, 2002 (other than our Directors) and (b) Defined Contribution Pension Plan ("DCPP") which is applicable to permanent employees (other than our Directors) who were permanent on or after July 1, 2002.
a. Defined Benefit Pension Plan
DBPP is calculated for participants based on years of service, salary level at retirement and is transferable to dependent families if the respective employee passes away. Telkom Pension Fund administers the program while the main source of pension fund comes from us and employee contributions. Employees participate in the program with 18% of their basic salary (before March 2003, the employee contribution rate was 8.4%) while we contribute the remaining balance. The minimum monthly pension benefit for retired employees is approximately Rp600,000 per month, or minimum Rp450,000 per month for spouses of the retired employees. We did not make any contribution to the DBPP for 2017 and 2018. In 2020, we contributed Rp205 billion to the DBPP.
Telkomsel operates its own DBPP for its employees. With this program, employees are entitled to retirement benefits calculated based on their latest basic salary or take-home pay and years of services. PT Asuransi Jiwasraya (Persero) manages this program under annuity insurance contracts. Up to 2004, employees would contribute 5% of their monthly basic salaries to the program, while Telkomsel would contribute the remaining balance. Since 2005, Telkomsel has contributed the entire amount to the program, which totaled Rp125 billion and Rp207 billion for 2018 and 2019, respectively, and was Rp53 billion in 2020.
b. Defined Contribution Pension Plan
We operate a DCPP for permanent employees other than Directors who were permanent on or after July 1, 2002.
DCPP is managed by several appointed financial institutions pension fund from which employees can choose. Our contribution to the financial institutions pension fund is determined by the portion taken from participating employee's basic salary, which totaled Rp13 billion, Rp55 billion and Rp41 billion, for the years ended December 31, 2018, 2019 and 2020, respectively.
Management of Employee Relations
Pursuant to Law No. 13 of 2003 on Manpower (as amended by the Job Creation Law, the "Manpower Law") and Law No. 21 of 2000 on Employee Union/Labor Union, our employees established SEKAR (Serikat Karyawan). As of December 31, 2020, SEKAR represented a total of 7,321 employees or 75.1% of our total workforce (excluding the employees of our subsidiaries).
Pursuant to the Manpower Law and Regulation of the Minister of Manpower and No.28 of 2014 on Procedure for Drafting and Ratifying Corporate Regulation also Drafting and Registering Collective Labor Agreement, SEKAR is entitled to represent employees in the negotiation of collective labor agreements with our management. Our Company and SEKAR entered into an eighth collective labor agreement dated October 14, 2020.
The employees of Telkomsel, PT Infomedia Nusantara, Metra Digital Media and Graha Sarana Duta have also established employees' unions. Telkomsel employees' union (Serikat Pekerja Telkomsel or SEPAKAT) represented a total of 4,590 employees or 85.5% of Telkomsel's total employees. Infomedia Nusantara employees' union (Serikat Pekerja Infomedia Nusantara or SPIN) represented a total of 181 employees or 67.7% of Infomedia Nusantara's total employees as at December 31, 2020. On the other hand, Metra Digital Media and Graha Sarana Duta's employees' union (Serikat Pekerja Metra Digital or SPMD and Serikat Karyawan Graha Sarana Duta or SKATA) respectively represented a total of 155 employees (80.0% of their total number of employees) and 670 employees (89.3% of their total number of employees) of each subsidiaries total employees. Neither Telkom nor Telkom Group subsidiaries had experienced material labor action.