Only one in three PSUs can pay higher wages

Government-owned drug companies said although they are making profits, implementing the revised salaries will push them in the red.

The Union Cabinet’s decision to allow government-owned companies to raise wages of their employees by an average of 67 per cent can successfully be implemented only in a third of the companies which have the financial resources to pay higher salaries.

Government-owned drug companies, for example, said that although they are profit-making, implementing the government’s pay revision scheme will push them into losses.

There are a total of 244 central government-owned companies, of which 151 are profit-making. “Out of 151 profit-making PSUs, 76 will be able to implement this scheme fully. The rest can implement this scheme in phases,” Heavy Industries Secretary R Bandyopadhyay said.

The 93 loss-making companies will not implement the pay revision at all till they start making profits, Bandyopadhyay said.

The smaller government-owned companies also fear that their inability to give their employees higher wages would result in employees revolting.

“It will be difficult to absorb this wage revision. Currently, 12-13 per cent of our turnover is spent on salaries. If we implement the wage revision, it will exceed 20 per cent, which is beyond our paying capacity. This may lead to employee unrest as it may not be the same as that of oil companies,” said RK Vashishtha, managing director, Rajasthan Drugs and Pharmaceuticals Ltd.

Even some of the bigger companies such as Bharat Sanchar Nigam Ltd will spend around 25 per cent more when the higher wages start next year. The company has not been providing for the arrears it would have to pay its 300,000 employees as the pay revision will be effective from January 1, 2007.

The oil companies such as Oil and Natural Gas Corporation (ONGC) and Indian Oil Ltd (IOC) have provided for higher wages in both the quarters of this financial year and for the whole of the last financial year. ONGC, for example, provided Rs 218 crore for higher wages during the quarter ended September 2008. This was around 79 per cent of its total wage bill during the quarter.

IOC has provided Rs 1,073.9 crore between April and September this year as provisions for higher salaries effective from the beginning of 2007. The company’s revenues are around Rs 2,50,000 crore.

“We will not be hit by the arrears as we have provided for it already. The higher wages will be a problem for us as we can afford it,” said a senior ONGC official.

Steel Authority of India Ltd has also provided Rs 859.75 crore in the April-June quarter and Rs 1,357.45 crore in the July-September quarter for higher wages.