LIC staff may get Rs 12000-25000 hike

Employees of the Life Insurance Corporation of India (LIC) are likely to get an annual hike in their pay package of Rs 12,000-25,000. This is provided they accept the management's proposal of raising the corporation's wage bill by 11 per cent.

Unions are, however, demanding a hike of 13.25 per cent in line with the rise in the wage bill of the banking sector, which was settled late last year.

"We have proposed an 11 per cent hike in the wage bill plus a productivity-linked lumpsum incentive (PLLI)," said A K Shukla, managing director, LIC.

The PLLI is capped at 6 per cent, but has in the past couple of years dropped to three per cent as the corporation's premium income has fallen. The idea to offer 11 per cent hike in the wage bill is in line with LIC's plans to contain the cost ratio as per international standards.

"We wish to improve our salary expense ratio and bring it down to five per cent in the next three years," said Shukla. Today the ratio is less than 6 per cent, from 10 per cent earlier.

The total wage bill amounts to Rs 3,464 crore, of which Rs 2,800 crore is the actual wages paid to employees and Rs 600-odd crore comes in the form of incentives to marketing officers.

LIC's business is growing in excess of 60 per cent. As such the wage bill as a percentage of total premium income has fallen, from 6.07 per cent in 2002-03 to 5.49 per cent in 2003-04.

Unions claim LIC's wage bill as a percentage of premium income is the lowest in the world. They are demanding a hike commensurated with the rise in the corporation's business income.

A second round of wage talks will take place in the coming week as the management wishes to finalise the wage revision. As unions have been dissatisfied with a 11 per cent hike, the management is working on various other combinations.

"The final proposal will need notification by the finance ministry as per the LIC Act wherein the power to raise wages lies with the ministry," said Shukla.

The corporation has sought time with the ministry for the same. Once the quantum is finalised, the management hopes that the revised pay scale will come through by March this year.

The wage negotiations at LIC had been delayed as the government wanted to settle the wage revision of the 7,57,000 lakh bank employees, which got over on November 23. Last time, the wage hike of LIC employees stood at 11.5 per cent.