THE FATE OF EMPLOYEES OF CENTRAL PSUs
RELEASED UNDER VRS / VSS

- NISHITH CHOWDHURY

We are not aware if any survey has been made till now regarding the fate of the employees of central public sector undertakings who were forced to accept termination of employment under VRS / VSS. Where are they and how are they surviving would not be a bad topic for research scholars for a Ph D. The topic may even earn enough importance for study by scholars of socio-economics in our country at some future date.

Amendment of Law

In 1991, the then Congress Govt. abandoned the policy of self reliance and surrendered to the forces of imperialism. As dictated by such forces the Govt. decided to follow the policies of globalization, liberalization and privatization. Thus began the uninhibited application of these anti people and anti national policies. The role of the public sector was completely marginalized. Privatization and disinvestments in public sector became the order of the day. Contracting out and outsourcing of public sector jobs became a common practice.

Despite opposition of the Left, the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) was amended to include in its ambit the public sector undertakings. The Govt. selected 58 industries under the central PSUs with the aim to permanently close them down. In the name of so called revival a process started immediately after the amendment of SICA during 1992 to refer these PSUs to BIFR. As a consequence revisions of pay scales of employees of such companies were outrightly denied.

The Scheme

The process started with the introduction of the Golden Hand-shake Scheme which at a later stage got redesigned to a so called labour welfare measure in the name of Voluntary Retirement Scheme (VRS). Under this scheme a worker opting to accept the scheme was offered compensation at a rate of 1.5 months of last pay drawn for each completed year of service. In addition, payment of provident fund and gratuity were made as per extant rules. Employees having service of 30 years and more were offered enhanced compensation at a rate of 2 months of last pay drawn for each completed year of service or 60 months pay whichever was less.

Since the scheme failed to find adequate response the Govt. thereafter introduced Voluntary Separation Scheme (VSS). The rate of compensation under this scheme was higher than that in the previous one. In organizations where there was no pay revision after 1987, the rate of compensation was doubled while for the organizations where revision of pay scales were made in 1992, the rate of compensation was made 1.5 times the amount determined.

Gujarat Model and DPE model within the same fame work were propagated. However, an ominous condition was added to the VSS scheme which effectively demolished the “voluntary” aspect. In fact the word “voluntary” henceforth became a mockery since the VSS scheme was clearly intended to be coercive in nature.

The condition stipulated that if any employee did not opt for VSS within the prescribed time limit then he/she would face retrenchment under sec 25F of Industrial Disputes Act,1947. The said section provided compensation for retrenchment at a rate of only 15 days pay (on the basis of last pay drawn) for every year of completed service. The mask was finally off. Coercive termination of employment in public sector organizations was regularized. In the 58 sick public sectors there were wholesale exit of virtually all workers under VSS. In 2002 – 03 over 50,000 workers of public sector lost their jobs in this fashion.

 

What Employees received

Let us now look at what these employees received as compensation for jobs lost. The very maximum amount inclusive of all (viz., as compensation under VSS, PF, Gratuity, Leave Salary etc.) that a worker obtained was about Rs. 20 lakhs. Who is this worker?

To receive this maximum amount the worker must have completed 30 years service, must not have taken any PF loan during his entire period of service and had maximum possible leave balance. Obviously such workers were very few. The majority who lost their jobs were much younger and had much less length of service and had 10/15/20 years service left. For them it was nightmare .They had so many obligations and commitments still to fulfill. Their children were young with education unfinished. They were yet too young to have enough means to build houses of their own. How much was the amount such workers received? Perhaps a maximum of Rs. 7 to Rs. 8 lakhs, even less. And let us not forget those large numbers who made frightened and tearful exit with a meager sum of Rs. 5 to Rs. 6 lakhs in hand.

Let us assume for arguments sake that in 2002 a worker on termination of employment under VSS received on an average the sum of Rs. 8.0 lakhs. Let us also assume that he could invest most of this money in Post office Monthly Income Scheme, say Rs. 7.0 lakhs, leaving aside Rs. 1.0 lakh to meet initial expenses. Against this investment, he received Rs. 5,541/- per month. Let us now try to realize the position of those terminated workers after ten years after they lost their jobs?

In 2002 Post Office MIS offered an interest of 9.5% which in 2011 has come down to 8.5%. The maturity bonus in 2002 was 10%, now it has been reduced to 5%. In 2002 the investment of Rs.7.0 lakhs fetched a monthly interest of Rs. 5,541/-. The same investment now fetches a monthly interest of Rs. 4,666/-. In 2002 the monthly income of Rs. 5,541.00 might have been just adequate for him to pull on. What about now?

In the first quarter of 2002 AICPI (base 1960) was 2302 which has reached 4246 in the first quarter of 2011. Inflation existed even then. Yet, the cost of basic articles of daily need had not then gone beyond the means of common man. The situation is now frightening. Inflationary pressure on the economy has pushed prices of essential commodities beyond the means of even the middle class. The workers who lost jobs in 2002, who in addition carry the stigma of retrenchment from a closed industry, have been compelled to gradually curtail standard of living. In reality, their means have gone down to the bottom of the barrel. They have their backs to the wall. And they have a question to the central government. Why is it that they are not provided with the minimum amount of money just to survive, let alone being comparable to what they would have earned had they been allowed to serve public sector for the remainder of their service lives.

Minimum needs to survive

Experts of the Indian Institute Nutrition, Hyderabad have prescribed minimum food equivalent of 2,875 kilo calories perday for survival of an ordinary man. However, in the Indian Labour Conference held in 1957, it was recognized that the minimum daily requirement of food for a working person should be equivalent to 2,700 kilo calories. To ensure this intake as determined by Indian Labour Conference, the following is a representative table of daily menu of food for a single person.

Sl. No.

Food Item

Quantity

K.Calorie

1

Rice

459 g

1588

2

Moong or Masur Dal

61 g

212

3

Green Vegetable

208 g

115

4

Milk

184 ml

185

5

M.Oil

37 g

331

6

Sugar

50 g

195

7

Fish or Meat

58 g

74

 

Total

 

2700

The cost of the above items of food in 2002 as compared to what they are now are given in the following table no. 1

 

 

 

Table no. 1

 

 

 

Sl. No.

Food Item

Quantity

Price Per Kg during 2002(Rs)

Amount required then to purchase that quantity of food(Rs.)

Price Per Kg during 2011(Rs.)

Amount required now to purchase that quantity of food(Rs.)

1

Rice

459 g

12

5.51

25

11.47

2

Moong or Masur Dal

61 g

28

1.71

60

3.66

3

Green Vegetable

208 g

8

1.66

20

4.16

4

Milk

184 ml

12

2.21

28

5.15

5

M.Oil

37 g

35

1.30

77

2.85

6

Sugar

50 g

15

0.75

32

1.60

7

Fish or Meat

58 g

50

2.90

120

6.96

Total

 

 

 

16.04

 

35.85

 

 

Table No. 2

 

 

Sl. No.

Subject

Amount required to be spent during 2002 (Rs.)

Amount that has to be spent now during 2011 (Rs.)

1

Expenditure per head per day for food items

16.04

35.85

2

Monthly expenditure for a family of 5 members

2406.00

5377.50

3

Expenditure towards clothing for 5 persons per month taking 22 Metres of cloth per person per annum

183.22(Taking cost as Rs,20/- per metre)

458.33(Taking cost as Rs,50/- per metre)

4

Total ( 2 + 3 )

2589.33

5835.83

 

 

 

 

5

House Rent/Electricity/ Fuel cost (One fifth of 25% of the total cost shown at 4 above)

129.47

291.80 *

The same Conference also recommended that the basic needs of a person should, in addition, include 18 metres of cloth in a year, a minimum 5% towards house rent and a further 20% towards electricity, fuel and other incidentals.

For a family consisting of spouse, two children and one parent besides the worker, i.e., a family of five, what is the cost now as compared to that in 2002, as illustrated in table no. 2

*If present ground reality is considered this amount is way below the market rate. No premises is available on rent below Rs. 1,000/=. One gas cylinder costs Rs. 400/=. Besides, there are expenditure towards children’s education, transport, medical needs and other social commitments.

Even assuming that in 2002 the worker could invest every paisa of the money he received after release under VSS (which, in fact, was impossible), his earning today does not even fulfill his basic needs.

The harsh reality is that those hapless workers have faded into oblivion, lost in the crowd of millions of downtrodden of our country. They are able bodied yet jobless, underfed and even suffering from pangs of hunger. Who spares a thought for them after ten years and who even has the time for it? Obviously not the patrons of market economy, be it the government in the centre or in the states.

 

Source:- Working class/December’2011