The government today approved the revised pay scales for the executives of Steel Authority of India Ltd (SAIL). This move is expected to give a fillip to the ongoing voluntary retirement scheme (VRS) of the loss-making steel major. The VRS scheme had evoked lukewarm response and SAIL had extended the duration of the scheme twice due to this reason.
The new pay scales for the SAIL executives are based on the recommendations of the Justice S Mohan Committee set up in 1998-99 to revise the salaries and perquisites of the officers of public sector undertakings (PSUs). The wage revision for non-executive members of SAIL is still under negotiation.
Only around 2,500 employees of SAIL have so far opted for the VRS. The target, according to SAIL chairman Arvind Pande, was to downsize by around 7,000 employees through the ongoing VR scheme. The scheme was linked to the revised pay-scales.
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SAIL has also raised Rs 315 crore from the market out of this year's share of Rs 500 crore to finance the ongoing scheme. Since the VRS offered lumpsum payments at the time of separation, SAIL employees were eagerly waiting for wage revision.
SAIL, which was given an over Rs 8,400-crore financial package for turning around in February 2000, has reduced its losses by nearly 50 per cent to over Rs 700 crore in 2000-01. The government had offered to stand guarantee for raising Rs 1,500 crore from the market to fund the VRS as part of PSU's efforts to rationalise the workforce.
This year's scheme was originally open from February 20 to April 16. But due to poor response, SAIL had extended the scheme till May 15. The company extended it a second time by 75 days in an attempt to achieve the target of 7,000 separations in the current financial year. Last year, 13,000 employees opted for voluntary retirement against a target of 10,000.
SAIL had agreed to bring down its workforce to 1,00,000 from the existing level of about 1.6 lakh by a mix of voluntary retirement and natural separation over a period of four years. The closing date for applications for the ongoing VRS is July 15. The scheme would close on July 31.