New Vrs For Public Sector Approved

The government has approved a new voluntary retirement scheme (VRS) with a package of social benefits for public sector employees.

Under the new package, public sector employees will be allowed to retain official accommodation for a period of two years from the date of voluntary retirement. They can also avail medical facilities for the period. They would also be allowed to pay water and electricity charges at the existing rates in companys townships. Educational and transport facilities to the children of workers will also be continued for the period.

The retiring employees will be allowed to form co-operatives and would be encouraged to invest part of their compensation amount with public sector financial institutions. The details of such cooperative ventures could be worked out by each enterprise depending on its nature of work.

 

The industry ministry had, in a note placed before the cabinet, proposed a series of measures to make VRS more attractive. The new package retains most of the financial benefits of the department of public enterprises guidelines of 1988. Surplus employees will be paid one-and-half months pay for each year of service subject to a maximum of 36 months, or pay for the period of service left whichever is lower.

The industry ministry pointed out that the total cost of the scheme for 21,000 workers considered surplus in public enterprises under revival or restructuring is about Rs 392 crore.

However, if they were to be retained for an average of 10 more years, the total cost of paying their salaries would be around Rs 930 crore at current prices.

The proposal to make the voluntary retirement scheme more attractive was mooted because there has been a steady decline in the number of workers opting for voluntary retirement.

The response to the voluntary retirement scheme was initially satisfactory with 26,500 workers opting for retirement between 1991-92 and 1992-94. However, the number came down substantially in 1994-95 and 1995-96 to only 8,000.