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ISLAMABAD: The government has decided rationalising the workforce of Pakistan Steel Mills (PSM) to minimise the salary bill being paid out of federal budget.

It had paid Rs435 million salaries to PSM manpower for the months of October and November last year under a Jan 29, 2016 decision of the Economic Coordination Committee (ECC) of the Cabinet.

Subsequently, it concluded that it could not justify salaries for a closed industrial unit and hence decided to put the responsibility on the board of directors and management of PSM to do so while cutting down the workforce.

Therefore, it has asked PSM to consider options available under the Pakistan Commercial and Industrial Employment Ordinance of 1968 to keep its manpower at bare minimum essentially required to operate a closed mill.

In a fresh order seen by Dawn, the Privatisation Commission has asked the PSM management to take three major steps before claiming the salaries of its employees from December 2015 onwards.

Currently, there are around 1,250 contract and daily-wage employees on the payroll of PSM besides about 14,800 regular staff.

PSM is on ‘zero production-heat mode’ since June 10, 2015 due to drastic gas cuts by Sui Southern Gas Company Ltd. Also, some critical units like galvanising plant, billet mill, bloom casters and billet casters are closed for almost six years now.

The privatisation commission has now directed the “PSM board to justify the retention of total number of regular as well as contract employees and daily wagers, given the mill is closed since June 2015”.

An explanation has also been called from the PSM board for not appointing a regular chief financial officer till date.

The board has also been directed “to endorse the future salary bill of its employees — regular, contractual and daily wagers — which are essentially required to operate a closed mill after verification of the same by the PSM board audit committee”.

On top of that, the mill has been told that since “it is not operative, the PSM board may review the options available under the Pakistan Commercial and Industrial Employ­ment Ordinance 1968”.

The decision of the board should be submitted to the privatisation commission to enable it taking “further necessary action”.

A Planning Commission official, requesting not to be named, explained that some units of the mills had been closed several years ago but their full manpower deployment continued until now.

He said originally it was a lapse on part of the Ministry of Industries and Production to point out this financial bleeding but then the Privatisation Commission also could not take note of the situation for more than two years now.

He agreed that PSM had lost a total of Rs20bn in the shape of compulsory salaries and other utility bills, etc over the last 10 months even though the mill’s output had come to a naught.

At risk are now the major plants like blast furnaces and coke over batteries, reflecting the negligence of the government, management and parliamentary committees as the mill is being run on an ad hoc basis.

In the process, the PSM losses and liabilities that stood at Rs26bn in 2008 have now increased to Rs375bn, said an insider.

Published in Dawn, February 20th, 2016