Do Voluntary Retirement Schemes serve their purpose?

Do Voluntary Retirement Schemes serve their purpose?

The recent controversy over the GO No.5 of 18-7-06 providing budget for retrenchment of 60000 employees in 30 state level public enterprises ( SLPEs) in the state of Andhra Pradesh and its suspension has given the government some time to look back and take some cool-minded decisions about the rationale and justifiability of the external-agency induced restructuring reforms. The writer of this article being an Ex-General Manager of SERIFED, an SLPE, having been retrenched under so called VRS and being a victim of the such reforms wishes to air his views on the justifiability of such reforms and what kind of output results out of such exercises.

It is unfortunate that state government has been depriving the livelihood of many hapless employees to finance the populist and vote-securing projects. It is akin to ‘robbing Peter to pay Paul’. It is apparent that the World Bank is financing public welfare projects. But, while doing so, it is stipulating that the expenditure on salaries of the employees of both government department employees and public enterprises should come down every year continuously. It has given the advice through its conditions that government should prioritize its spending on education, health, power supply etc. What with lack of native wisdom or lure of bulk finance, the governments irrespective of their party affiliations have been complying with external advice and guidelines. It is unfortunate that handloom industry, agriculture, handicrafts etc, as a sequel to compliance to such guidelines, got very paltry budget allotments and as its retribution the ire of the affected artisans and farmers was reflected in the rout of Telugu Desam government. The governments are oblivious to the fact that they are surrendering their sovereignty just for the sake of securing hassle-free public finance. The result is that our state-specific priorities are dictated from outside. It is unfortunate that the governments are ignorant of the fact that externally-induced reforms miss out on the state-specific needs like those of handloom weavers, craft artisans, resource-poor farmers etc. An important realization that has to dawn on them is that World Bank or Americans or Europeans have very scant experience in dealing with such state-specific needs and hence their advice has to be taken with caution. But, Telugu Desam government has taken the advice of World Bank and complied with it in letter and spirit. In such subservient mood, it made a seamless arrangement to implement VRS programmes. As part of that, it was ensured that any petition, even the most insignificant one, challenging the VRS proceedings of any SLPE by even a few employees before courts had received the special attention of the Advocate General and every VRS proceedings went like a bullet from a gun without any hitch. Any representations to the government from victimized employees were pushed under carpet. What is surprising is that Telugu Desam government, which was so convinced about the world-bank induced reforms then, has taken a U-turn now after it rout from the rule and now took up the cause of employees who are on the chopping stick. Now, the party is thinking of ‘human face’, which was never in their vocabulary. The point that is proved here is that wielding of power is of paramount importance than anything else.

Under the restructructing program, 23, 449 employees of 32 SLPEs were sent out of jobs and an amount of Rs.351.39 crores was disbursed towards VRS benefits till date. Under the program, 24 units were ordered for closure, 32 SLPEs downsized and 9 units disinvested. The World Bank is all praise for the effective implementation of the restructuring programs. There is also a claim that 35% of the retrenched employees were redeployed, but the proof of the same is not within reach of the writer.

As per VRS guidelines, the decisions about which posts and how many have to be cut are left to the discretion of the managements of the SLPEs. No foolproof methodology was evolved at the government level. The guidelines, if any, are too broad to obviate arbitrariness. The government just endorses whatever proposals come from the SLPEs with regard to the kinds of posts and the number of employees in each category to be declared as surplus and retrenched. The net output of VRS implementation is that disproportionately big chunk of old employees remained in service, whereas young and energetic employees have left SLPEs either out of will or force, leaving the SLPE weaker than before. Though the guidelines are cautioning about proper age-mix in the remaining workforce, it was observed more in breach than in practice. A case in point is SERIFED, an SLPE, where all young officers were retrenched and because of that, there would not be even single officer and manager available in another four years. Sudden human resource bankruptcy was foisted on the SLPE.

The state level committee which monitors the restructuring and whose members are not willing to consider any other constructive and employment-generating measures, always on harp on closure. SERIFED has been making profits continuously for over 4 years till the time of restructuring. Hence the need for its downsizing was not as much as it was before. Nevertheless, buckling under the fear of winding up which would kill the lives of many, the management proposed downsizing by one-third, though that also was not warranted. The point here is that the decision about the downsizing and the number to be downsized is just an act of ducking, but not of objectivity. In fact, in most of the SLPEs there is enough scope for work in services. The paradox is that a large chunk of the employees in the Cooperative department are on deputation to the other organizations, since they don’t have work in their own department. Government did not dare to retrench any government employee, though they don’t have work. This is due to strong unionization in them and the perceived immediate and direct backlash from the unions. But, the unions were weak in SLPEs. Hence, the government presumably chose an easy target of SLPE employees to satisfy the World Bank’s desire. In fact, the salaries given to SLPE employees are not an expenditure on the government exchequer and hence reduction does not immediately benefit the treasury. If the organizations are allowed to work on their own even without any budgetary support, they would run well. The malady is that the government appoints chairman and members on the board of SLPEs without any consideration to their qualifications and the suitability of their background to the objectives of the particular SLPE. They mostly contribute to the expenditure, but not to revenues or effective management. That apart, governments use SLPEs for public purposes like free bus passes for underprivileged groups which cut into their profits on one hand, but at the end of the year, on the contrary they measure its performance in terms of profits. The truth is that governments represented by politicians, bureaucrats and deputationists had a big share in the messing up of SLPEs. Since they destroyed, they want to close it, though the scapegoats on the altar are the employees of SLPEs.

It is quite visible that the employees of SLPEs are more focused and devoted towards their jobs than their counterparts in the government. Compare the attitude of an employee of APSRTC with that of his counterpart in any government department. Vast difference is easily noticed and an RTC employee is many times better. I opine that APRTC is more useful than any other government department. But that SLPE is an easy target of all governments. There are many areas that need strategic and managerial intervention. The World Bank does not seem to have applied its wisdom in this area. Every government functionary sings one refrain that governments are not good for business. Presumably, World Bank has implanted this self-talk in the minds of the government officers. Thank god, they did not ingrain another refrain like ‘government is not good for any thing’, though it is believed to be true by many people. Governments and World Bank are not prepared to improve or streamline. The only recourse they know in the name of streamlining is downsizing. Is it not an insolvency of ideas and will to work and improve?

Restructuring not only destroys the livelihood of employees but also fails to improve the performance of the SLPEs. The mindset of the governments have to change towards taking positive decisions like productivity improvement of SLPEs in stead of just closing and washing of hands.

Dr.Appalayya Meesala