Wage Revision in PSUs

R Pattabiraman

The Third Pay Revision Committee was constituted on June 9th of 2016 by the GOI for the Executives of PSUs. The committee was directed with the terms of reference to recommend pay scale changes that are desirable, feasible, affordable linking the same to promoting efficiency, productivity and profitability.

The Report of 3rd PRC chaired by Sathish Chandra recommended 15% increase in pay only to the companies that are profit earning that also with a condition of financial impact linked with PBT (profit before tax). The affordability factor is fully linked with PBT factor not for one year but with 3 previous years. The financial impact for full 15% wage hike is also restricted with the financial impact of 20% of PBT. A company having profit of say 1000 crore (PBT) may be allowed to implement 15% hike, only when the expenditure for the wage revision is well within 200 crore that is 20% of PBT. If the expenditure is higher, then the hike is reduced to 10%, 5% and to no benefit even profit is there.

Sathish Chandra committee has gone beyond its terms of reference by completely linking the affordability with profitability and restricting with 20% of PBT. Unfortunately, the committee meddles with the affairs of workmen (Non Executives) Wage Revision also and making the bilateral negotiation meaningless. The committee has recommended that the workmen wage revision should not create any conflict with that of Executives and the periodicity should not be less than that of Executives.

The whole trouble started with defining affordability as a synonym to profitability by both earlier Rao committee, the second PRC of 2007 and the present Sathish Committee, the 3rd PRC of 2017. In the earlier guidelines of DPE up to 7th round issued in 2006 for workmen, there was a provision or relaxation for loss making units to get their wage revision provided the concerned PSU is having resources to meet the expenditure. This enabled clause to help the incipient sick units having losses for three consecutive years to get their wage revision is totally absent after 2007.

The DPE guidelines issued for 8th round on 24th Nov 2014 direct the PSUs to start wage negotiations with the women keeping in view the affordability and sustainability. Here the affordability is not explicitly defined as that of the guidelines issued for Executive officers. But through a conditional clause the profitability is inserted. The conditional clause imposed is that there should not be any conflict with the Officers' pay revision. Regarding loss making units the workmen are having a specific guideline and the relevant clause is ‘to those PSUs having approved revival plan the wage revision will be done as per the provisions of the approved revival plan only’.

Wage negotiations were allowed upto 2006 if resources found, even not profit for the companies not registered and referred to BRPSE as Sick units. The present Government has closed the BRPSE outfit and the power of monitoring the PSUs is given to the respective ministry and the concerned ministry should prepare revival plan for each sick or incipient sick units as per DPE guidelines issued in 2015 and 2016. These guidelines are linking the wage revision with the revival plan. The position as on today is unless the revival plan is approved for the concerned sick or incipient sick PSU, wage revision would not be allowed.

There are 70 loss making units of various pay scales as that of 1992, 1997, and 2007. Coal wage settlement for workmen is different, as their scales are being settled as per Coal Wage Board. Fortunately the loss making Eastern Coal got exemption from the cabinet and the officers of that unit would also become eligible since Coal India as a whole is eligible for 2017 wage revision. But in the case of big entities like BSNL, MTNL, AIR India the wage revision has become a serious issue as these entities have been in non-profit mode in the last few years. The inflationary factor comparing 1997-2007 is higher in the period 2007-2017 (In 2017 it is 119.50% IDA comparing 68.8 in 2007). Restoration pf real wages by merging the IDA to all the PSUs as on 1-1-2017 is a must as the IDA has gone beyond 100 percent even this factor was not allowed in the loss-making units.

There are 13 lakh workmen and officers in the PSUs and of this roughly 10 lakh are in the workmen cadre. Because of these stringent conditions of affordability clause, linking profitability for wage revision 50% of workmen are not going to get their wage revision even after 10 years, some even after 20 years. Of this 50% not getting, 50% are belonging to only one PSU viz BSNL, as BSNL is having more than 2 lakh employees and executives. Though the reasons for profitability of a public sector are varied and many in number, the lakhs of workers are only made as victims. The policy framers in the Government, higher managerial professionals for mismanagement are let off free and not taking any responsibility for the losses.

One can understand incentives for higher profits, performance related pay for profits but it is inexplicable linking wages for profit in the name of affordability. The PSUs have been directed to start practising private managerial methods while dealing with workmen related matters. This great offence against lakhs of workers in the loss-making units should be met doubly and squarely by organising them in full strength to protect the PSUs from the danger of closure and for settling and restoring the long pending welfare of the employees.

Vol. 50, No.34, Feb 25 - Mar 03, 2018