A total of 5,500 workers have opted for Steel Authority of India Ltd's (SAIL's) voluntary retirement scheme that ended yesterday. SAIL is working on plans to introduce another voluntary retirement scheme.
The scheme, which was available to SAIL employees for six months from March 1, has surpassed expectations of the management, although the response is much lower than the last voluntary retirement scheme in 1993 when 17,000 employees opted for it.
The management was worried about low response to the scheme following the government's decision to revise the retirement age for public sector employees from 58 to 60 years. SAIL revised a part of the scheme to cover employees between the age of 55 and 60 instead of the earlier version in which employees in the 55-58 age group were covered.
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SAIL is now considering certain modifications in the scheme before offering another exit opportunity to employees. Depressed sales and profitability have forced the management to continue efforts to reduce staff strength.
As a component of total cost, SAIL's salaries and wages constituted a high 18.1 per cent between 1991-92 and 1996-97. Staff shedding is seen as a necessary measure to reduce cost and improve SAIL's ability to face the downturn in the steel industry.
SAIL's voluntary retirement scheme was innovative in that it did not offer a lump-sum payment. Instead, employees were offered their existing basic salary and DA monthly between the time they opted for the scheme and their date of retirement.
Since the age of retirement changed while the scheme was in operation, SAIL agreed to offer the monthly benefit till the age of 60 to all employees opting for voluntary retirement. In this sense, the package will cost the company much more than it had originally envisaged. Though the basic salary and dearness allowance will be computed monthly, it will be paid to retiring employees once a quarter. These employees will also be entitled to medical facilities. Employees above the age of 55 were offered 100 per cent of basic and dearness allowance, those between the ages of 52 and 55 were offered 90 per cent and those 52 years of age and below were offered 80 per cent. The scheme was, however, available only to employees with 20 years of service.