November 26, 2007	Monday	Ziqa’ad 15, 1428

Whenever there is some lay-off by a privatised unit, a fresh debate starts on whether surplus employees should be retained or the surgery should be with minimum pain. The most recent topic of this debate is the Voluntary Separation Scheme (VSS) offered by the PTCL.

While arguing against down-sizing, critics tend to forget a crucial question: Who do we run the business for? Are the employees supposed to work for providing goods and services to their customers, or just for creating more jobs than required? The interest of millions of customers is usually ignored in our populist zeal.

The number of employees in most of the public sector enterprises (PSEs) is usually much more than the required strength. Now that privatisation is the norm, the difficult and inevitable question of rationalising the strength of the workforce cannot be postponed. This factor is irritating the minds of many writers of my generation. Their worry is that privatisation is creating unemployment as each organisation is retrenching its surplus employees. Under the agreement with the Privatisation Commission, this right-sizing is done with a offer of golden handshake to facilitate the surplus employees in starting a new life.

For organisations like the PTCL, PIA, Steel Mills and banks, it has been a difficult choice but each of them has to take this decision sooner than later. New managements have to find a way to restructure their human resource pool. It cannot be denied that major consideration of these organisations is to improve their profitability. A motive generally despised by many.

The negative affects of over-staffing are rarely considered by the critics. In the first place over-staffing creates under-employment which affects the work culture and productivity. In most cases, it reduces profitability of the public sector enterprises substantially, and in many cases leads to the companies sinking into losses. Who pays for these losses? It is either the consumer who pays in the form of higher prices and poor quality of products and services. Or, the government has to provide a subsidy at the tax payers’ expense, as it has been doing in the cases of Wapda, KESC, PIA etc. The same amount could have gone to education and health. So, in any case, it is robbing Peter to pay Paul.

A question is asked why profit-making organisations are allowed to right-sizing. Is it right to hide the unemployed workforce by putting them where they are not needed? No. The better way would be to create an unemployment allowance for sustaining them in the interim period when a real job can be provided to them. Not the notional job, where they are not required. In many cases in view of changing job market requirements , they might need training in new skills.

Second, better profitability of an organisation always leads to capital formation, which results in expansion of business and that, in turn, creates more jobs.

Poor profitability of PSEs also means that there is no accumulation of capital, which is essential for investing in the maintenance, up-gradation and expansion of businesses. A good example is that of Wapda and Railways which have been eating on the capital assets and have invested little on the improvement and expansion from their own earnings.

Now let’s take some examples: First the most recent issue of the PTCL’s Voluntary Separation Scheme (VSS) package. The PTCL is now being criticised for offering its employees VSS. The employees had no choice but to work with the company, now they can opt between staying back at the existing terms or take the golden handshake. Many are sitting idle or are under-employed because their jobs were rendered redundant because of technology revolution in the telecom sector in the last few years. Most important, 5.7 million subscribers and 44,000 shareholders interests are completely undermined, when one pleads the cause of employees who have been given an option to leave the company or continue their job.

On the other hand, there are plenty of jobs now with the opening of the telecom sector. This sector has grown manifold. In 2003 when telecom was deregulated and scorned by the traditionalists, the tele-density was 6.3 per cent and in just four years it has risen to 40.2 per cent. Most of the growth is in cellular and Wireless Loop Lines (WLL) sector which shows that as the profile of the telecom sector is changing the jobs are also shifting. In last four years jobs in telecom sectors have increased many times – from over 350,000 in 2004, this sector now employees over one million people directly or indirectly.

Most telecom and IT companies are cribbing about availability of right human resource. The lack of human resource is one of the constraints in the growth of the industry, which has grown at an annual rate of over 50 per cent during the last three years.

While judging the privatised companies severance schemes, we should probe: whether the new management is doing its best to provide better and cheaper goods and services; whether they are investing in the up-gradation and expansion or not; and whether the right-sizing is a part of overall restructuring of the company or, it is just an easy way out to cut the operational cost.

Before privatisation all the banks had a total strength of 95,000 employees. Now this sector is booming with over 200,000 direct employees and many more indirectly. The banks have out-sourced services like tele-marketing, marketing of consumer services, telephone banking, security, etc. creating jobs for the educated youth.

Another example is of the cement industry. When privatisation started its capacity was around nine million tones. Today it has doubled, creating many more jobs than it ever had. The industry needs more bags, more trucks for transportation, and more skilled and unskilled construction workers. Now it is difficult for these industries to find qualified engineers and technicians. This shortage of workforce has raised the wage levels.