SAIL'S VOLUNTARY RETIREMENT SCHEME

Under the new package, employees who opted for the scheme, depending on their age, would get a monthly income as a percentage of their prevailing basic salary and dearness allowance (DA) for the remaining years of their services, till superannuation. Employees above 55 years of age would be given 105 per cent of the basic pay and dearness allowance (DA) every month. Those employees who were between the age of 52 and 55 years would receive 95 per cent of the basic pay and DA while those below 52 years would get 85 per cent of the basic pay and DA. The new scheme, like the old one was a deferred payment scheme, with extra carrots like a 5% increase in monthly benefits for each of the three age groups.

By September 1999, over 4,000 employees opted for the new scheme. About 1,700 employees opted for VRS in the Durgapur steel plant while in the Bhilai, Bokaro and Rourkela steel plants. The number varied between 400 and 700.

In September 2000, SAIL announced yet another round of VRS, in a bid to remove 10,000 employees by the end of March 2001. The company planned to approach financial institutions for a credit of Rs 5 billion. Pande said: "We are awaiting the government nod for the VRS scheme, drawn on the pattern of the standard VRS by department of public enterprises. We expect to get the clearance by the end of the month."

On February 08, 2001, SAIL ended its four year recruitment freeze by announcing its plans to fill up more than 250 posts at its various plant sites in both technical and non-technical categories. According to a senior SAIL official: "This recruitment is being done to ease the vacancies created due to natural attrition and those that arose after the previous VRS."

THE PERSUASION

On December 27, 1999, SAIL initiated a company-wide information dissemination program to educate the staff on restructuring. The company drafted an internal communication document entitled "Turnaround and Transformation" and a special team of 66 internal resource persons (IRP) had been assigned the task of preparing a detailed plan to take this document to a larger number of people within the company. The 66-member team was constituted in September 1999 and was stationed in Ranchi to undergo a detailed briefing-cum-training course. A generalized module was presented to the IRP team during the course, which then summarised the root causes of SAIL's crisis and the strategies to overcome it.
According to an official involved with the program: "Initiatives like the power plant hive-off or the Salem Steel joint venture will hinge on employee concurrence, particularly at the shop floor level, and therefore there has to be an intensive communication program in place to reassure employees that their interests will be protected."

The 66-member IRP team conducted half-day workshops across plants and other units based on three specific modules:
A video film conveying a message from the chairman of the company.

A generalized module of the recommendations of the turnaround plan focusing on restoring the financial foundation, reinforcing marketing initiatives and regaining cost leadership.

A module covering plant-specific or unit-specific issues and strategies for action.
The exercise was expected to cover at least 16,000 SAIL employees by the end of March 2000. A senior official at SAIL said: "The idea is that the employees covered in this phase would take the communication process forward to their peer group and fellow colleagues."

The staff education exercise was stressed upon, particularly in view of the power plant hive-off fiasco, which could not take off as scheduled due to stiff resistance from central trade unions. The problem, at the time, was that the SAIL top brass had failed to convince the employees that jobs would not be at risk because of the hive-off.

THE REACTION

The trade unions were on a warpath against the recommendations of McKinsey. Posters put up by the Centre of Indian Trade Unions (CITU) at SAIL's central marketing office said that the McKinsey report was meant, not for the revival or survival of SAIL, but for its burial. A senior TU leader said: "SAIL TUs so far have been extremely tolerant and exercised utmost restraint. Even in the face of scanty communication by the management of SAIL, they have not lost patience in these trying times."

The TU leaders felt that SAIL would try to bolster support for the financial restructuring proposal based on the recommendations of McKinsey. But being a government-owned company, SAIL cannot take decisions on such recommendations as the privatization of SAIL or breaking it up into two product-based companies. Even in relatively small matters the like hiving off of power plants to a subsidiary company, with SAIL being the major partner, the government had not cleared SAIL's proposal, even after months of gestation. Therefore, it was futile to think that SAIL would secure the permission of the government to sell off Salem Steel Plant (SSP) in Tamil Nadu or close down Alloy Steels Plant (ASP) at Durgapur in West Bengal.

At SSP, all the TUs had joined hands to form a 'Save Salem Steel Committee' and observed a day's token strike on June 24, 1999, demanding investment in SSP by SAIL, rather than by a private partner.

Though TUs had no objection to voluntary retirements, they were not very happy about the situation. They were worried that employment opportunities were shrinking in the steel industry and that reduction of manpower would mean increasing the number of contractors and their workforce. After the Rourkela Steel Plant in Orissa absorbed contractors' workers on Supreme Court orders, fresh contractors had been appointed to fill up the vacancies.

© ICMR.Global CEO • December 2003, All Rights Reserved.