Move Afoot To Make Vrs More Attractive
The finance ministry is considering a proposal to allow part of the voluntary retirement scheme (VRS) compensation to be invested in a proposed Unit Trust of India (UTI) scheme. This is part of a package of measures mooted by the industry ministry to make VRS more attractive and beneficial for workers.
In a note placed before the cabinet, the industry ministry has pointed out that the investment proposal is intended to protect workers from the pressures of dissaving. UTI will be asked to offer attractive rates of interest through a special investment scheme tailored for those opting for VRS.
However, these measures will be supplemented in such way that the financial benefit will be retained as per the Department of Public Enterprises guidelines of 1988. Under the norms, surplus employees are paid one-and-half months pay for each year of service rendered subject to a maximum of 36 months or pay for the period of service left, whichever is lower.
The need to make VRS more attractive has been borne out by the fact that there has been a steady decline in the number of workers opting for voluntary retirement. The response to VRS was initially satisfactory with 26,500 workers opting for retirement between 1991-92 and 1992-94. However, this came down substantially in 1994-95 and 1995-96 to only 8,000 workers.
The ministry has suggested that the new measures should cover employees retiring under VRS for a period of two years from the date of voluntary retirement.
The package of measures include continuation of medical facilities as per the existing scheme or provision of medical insurance cover and allowing employees to reside in their quarters for two more years after they retire from service. They will also be allowed to pay water and electricity charges at existing rates in the companys townships. Educational and transport facilities to employees children will also continue.
The retiring employees will also be allowed to form cooperatives which will provide work through outsourcing of supplies or services by the parent company. The details of such cooperative ventures can be worked out by each public enterprise depending on its nature of work.
The ministry has pointed out that the total cost of VRS of 21,000 workers considered surplus in the public enterprises under revival or restructuring is about Rs 392 crore. However, if they are retained for an average of 10 more years, the total cost of paying their salaries would be around Rs 930 crore (present value at 12 per cent discount).
HIGHLIGHTS
Investment of VRS compensation in UTI scheme
Continuation of medical facilities or medical insurance cover for two years
Retain company accommodation and pay water, electricity charges as per existing rates.
Educational and transport facilities for employees children for two years.
Encourage retrenched workers to set up cooperatives.