It is a formidable task considering the fact that it took SAIL 13 years to reduce its manpower by slightly over 40,000. Can the public sector steel giant really achieve this?Its management believes this is achievable. But many others have doubts.

They link its success, particularly the success of its latest phase of VRS, with the signing of the long-pending wage agreement. The last one expired way back on January 1, 1997. "I am keen to take VR (voluntary retirement).

But if I take it now, I'm afraid, I will lose. Rather, I would wait till the signing of the wage agreement with the trade unions. I'm also suggesting the same to my friends," said a senior employee of the company.

He is not alone. There are many in SAIL who are thinking along the same lines. It is only natural. A settlement on the wage front would erase any misgivings the employees might have about the VRS. Since the expiry of the last wage agreement, SAIL has been paying a monthly interim relief, which is almost equivalent to 10-12 per cent of the wages.

Meanwhile, several rounds of discussion have taken place between the management and the trade unions and SAIL insiders feel that a stage has been reached where the new wage agreement should be in place in about a month or so.

SAIL executives are obviously expecting a substantial hike in their salaries following Justice Mohan Committee's recommendations. The amount of hike for the workers would be much less. SAIL executives argue that this would reduce the imbalance created by very high minimum wages and small differences between various levels and scales, leading to a situation where promotions are not financially attractive and only serve as status symbols.

The steel major is burdened with growing manpower cost. Over the past decade, its annual cost per employee has jumped from Rs 52,000 in 1990-91 to Rs 170,000 in 1999-2000. Its total wage bill has recorded a similar jump, from Rs 1,007 crore in 1990-91 to Rs 2,735 crore in 1999-2000. The wage bill as a percentage of its turnover has also increased during the period, from 11.9 per cent to 16.8 per cent. (In 1999-2000, it reported a turnover of Rs 16,250 crore.) This compares extremely unfavourably with its competitors in the secondary sector, whose wage bill is a mere 6-7 per cent of their turnover.

In spite of this, the funds-starved SAIL, which is set to post a net loss for the third year in a row, virtually has no alternative but to go in for a wage settlement. In fact, it has bought peace with the trade unions on the issue of business restructuring with an unwritten promise of an early wage settlement. The SAIL brass even agrees that the gains for the company from the business restructuring would be sufficient to offset the higher incidence of wages.

Optimism about early wage settlement stems from the fact that SAIL has virtually reached the final stages of the process of hiving off its captive power plants at Durgapur and Rourkela and the oxygen plant at Bhilai. SAIL insiders feel that once a breakthrough is achieved the ball would be set rolling and the balance of the business restructuring could be completed over the next two fiscals as already planned.

The imbalance in SAIL's wage bill can be set right with a massive reduction in its manpower. The company has already brought down its manpower from 201,415 as on March 31, 1988, to 159,940 as on March 31, 2000. This reduction of around 40,000 has taken a much longer time than the proposed reduction of 60,000. However, when the SAIL management argue that the earlier reduction was effected during a period when the age-mix was much lower than it is now, they have a point. With a bulk of the SAIL employees being in the 40 plus age bracket, achieving the targeted reduction may be a challenging task, but is certainly a possibility.

In the past five years, SAIL has reduced its workforce by 35,000 through VRS. The reduction in 1998 and 1999 was almost 20,000. It would not be unreasonable to expect around 20,000 employees opting for it once the new VRS is announced and the wage revision is finalised.

However, as was the case in the previous occasion, the SAIL management may not go in for such a large reduction in one go. In such a situation many employees applying late may have to wait for some other opportunity. There is also another reason that would induce employees to take VRS-the confusion about rollback in retirement age from 60 to 58 years. The uncertainty that looms over the special steel plants like Alloy Steels Plant at Durgapur or Visvesvaraya Iron & Steel Plant at Bhadravathi would also lead to large number of applications from these plants.