The Hindu : SAIL under pressure to reduce retirement age

Online edition of India's National Newspaper
Wednesday, Dec 31, 2003

Business

Business

SAIL under pressure to reduce retirement age

By Our Special Correspondent

NEW DELHI DEC. 30. Plans of the public sector giant, the Steel Authority of India Limited (SAIL), to stick to the retirement age of 60 years for its employees has run into rough weather. The Parliamentary Standing Committee on Industry has not accepted the reasoning of SAIL to continue with the 60 years retirement plan and has asked for specific details from the company to justify its decision of not lowering the retirement age to 58 years.

The committee, while recommending the lowering of the retirement age, had said that retiring the employees was a cheaper option than a voluntary retirement scheme (VRS), which SAIL had partially implemented last year. According to a memorandum of understanding signed by SAIL with the Union Steel Ministry, the company was to reduce its manpower by 13,000 through VRS during 2002-03. This was the plan so as to make up for the shortfall in the target of 10,000 reductions per annum in the previous years, but SAIL was able to separate only 5,814 employees through two voluntary retirement schemes during 2002-03. Thus, the programme for reaching the manpower base of one lakh employees would go beyond the target date of 2004-05 by at least one year.

SAIL's reaction to the recommendation was that it did not find the roll back of retirement age feasible as it would involve an immediate cash requirement of Rs. 300 crores to separate 8,000 employees who would be affected by the roll back. Besides the financial implication, the roll back was likely to be resisted by the employees, trade unions and officers' associations, resulting in industrial relations problems, the company said. Moreover, the roll back in retirement age would create a vacuum in the top management structure of the organisation, along with loss of continuity. Also, it might disrupt operations of steel plants as the company was in the process of turning around and a major shake-up at this stage could have adverse effects, SAIL told the committee.

The Parliamentary Committee, however, did not buy SAIL's argument. It categorically said that it did not agree with the plea that a roll back in the age of superannuation could create a vacuum in the top management structure along with loss of continuity. According to the committee, this plea not only casts aspersion on the efficiency and capability of the rest of the employees to undertake the challenges being faced during the turnaround but also raised a question mark on the motive and intention of the present top management of SAIL for providing so-called continuity in the system.

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