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6 PSUs axe 120,000 jobs in 3 years

Sandip Das in New Delhi

Profit was a dirty word and bottomlines were meant to be ignored. Set up to attain "commanding heights of the economy," the public sector units were the government's panacea for combating unemployment for decades.

Cut to the present. The government has cut off the umbilical chord which fed loss-making PSUs. Exposure to lean, mean and hungry multinational corporations has made them go back on their word to the country's unemployed.

In the last three years, India's top six blue-chip PSUs which include Steel Authority of India Ltd, Coal India Ltd, Bharat Heavy Electricals Ltd, Hindustan Zinc Ltd and Oil and Natural Gas Corporation have axed 120,000 jobs.

However, these companies have not gone for the retrenchment route taken by the private sector and have had to instead depend on the voluntary retirement scheme as well as the sabbatical scheme (voluntary separation for a specified period) to downsize. For 2000-01 alone, the separation cost for SAIL, CIL, HZL and BHEL was a staggering Rs 4 billion.

With demand for steel falling and international prices of steel hitting rock bottom, SAIL has had no option but to slash jobs. To produce around 11 million tonne of steel, SAIL employs 168,000 people. Essar Steel, on the other hand, employs 1,200 people to produce 2 million tonne of steel. "We need to bring synergy between the technology and manpower for surviving the emerging competitive regime in India as well as in the world," a senior SAIL official said.

More than 20,000 SAIL employees have opted for VRS in the last three years and many more are expected to accept the new scheme which is open till August end this year. The target is to reduce manpower from the current level of 167,000 to about 100,000 over the next three years. Some separation is also expected to come about with the company lining up a string of assets for divestment.

"Salary and wage bills of SAIL increased from Rs 12.03 billion in 1991-92 to Rs 27.35 billion in 1999-2000 registering a compounded annual growth of more than 11 per cent," he said. And that is clearly unsustainable for a company which posted a loss of around Rs 7.29 billion in 2000-01 and has already incurred losses of Rs 3.76 billion in the first quarter of the current financial year.

Coal India is also being forced to come to terms with reality. CIL and its eight subsidiaries' profit is going down. The coal companies' pre-tax profit went down from Rs 14.59 billion in 1998-99 to less than Rs 4 billion in the last financial year.

The company, as a result, had no option but to cut jobs and has already reduced its employees strength by more than 22 per cent from 656,535 in 1995-96 to 542,051 in 2000-01.

"We plan to further prune the workforce by 20,000 in 2001-02," says N K Sinha, coal secretary.

Of course, profit making PSUs are also taking pre-emptive steps to remain nimble-footed and competitive with multinationals close on their heels.

BHEL's wage bill constitutes 27 per cent of its turnover and with fierce competition from the likes of Asea Brown Boveri, the PSU realises the need to keep costs under control.

Little surprise then, that the Navratna PSU has already embarked on a staff reduction plan. BHEL has cut its workforce by more than 10,000 in the last three years to touch 51,500 this year from 62,212 in 1998-99. "To be competitive, cost cutting is a must and manpower reduction constitutes a major part of such cost cutting exercises," a BHEL official said.

Even the cash rich oil PSUs are not complacent about their current dominant positions in the industry. ONGC plans to trim its 40,000 strong workforce and has recently approved a restructuring programme.

It has appointed consultancy firm McKinsey and Company for advising it on organisational restructuring. "We want to economise our workforce in a gradual manner," an ONGC official said.

But there are some success stories in an otherwise grim scenario of PSUs battling with a large workforce. National Thermal Power Corporation has offered a VRS scheme selectively to those who had not got promotions for years.

"Only 15 odd people out of a 24,000 strong workforce applied for VRS and we have kept out workforce manageable," a NTPC official said. But these examples are only far and few as PSU jobs no longer have the stamp of security as in the past.

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