THE government’s decision to sack 9,350 employees of the Pakistan Steel Mills at a time when the State Bank is pushing banks to hand out billions in cheap loans to private businesses hit by Covid-19, so that they can maintain their payrolls, has come as a rude shock. The entire payroll of the largest industrial enterprise of the country has been terminated in spite of pre-election commitments by the prime minister and PTI leaders, especially Planning Minister Asad Umar, to reviving its fortunes with the help of the existing workforce through better management of its affairs. The government has decided to take the easier route after the failure of its halfhearted attempt to resuscitate PSM.

The steel mill is one of Pakistan’s most politicised public-sector businesses and had been suffering large losses and accumulating massive liabilities for over a decade. This eventually resulted in the PML-N administration shutting it down in July 2015 as part of a plan to privatise it. According to the federal minister for industries, who held a press conference a day after the ECC approved the plan to fire the employees, the company currently owes Rs210bn to banks. The sum is in addition to Rs90bn that the government spent to bail it out and Rs55bn to pay wages since its complete shutdown. Yet the decision to sack the entire staff is hard to justify, especially under the present circumstances when millions are losing their jobs owing to the deepening economic recession triggered by the pandemic. The reported death of two mill employees during a protest in Karachi against the decision shows the stress the workers are going through.

It is unfair to solely blame the employees for PSM’s collapse. The fact is that years of poor management and failure to appoint the right people with the relevant experience and knowledge to the top posts have done more damage than overstaffing or trade unionism. The mill was designed for an annual production of 2.2m tonnes to be profitable. But its capacity never exceeded 1.1m tonnes because of little investment and lack of interest shown by those entrusted with its affairs. Still, it remained profitable for most of the years between 1985 — the year it began commercial operations — and 2008 — the last year it earned profits. Post-2008 bailout packages could not revive it because they were not accompanied by a restructuring plan to turn it into a viable concern. The government just wanted to keep it afloat for privatisation as its production dropped below 20pc of the total capacity. The government claims that the employees’ sacking is part of its plan to revamp the mill. If so, such undoubtedly questionable mass dismissals would have been seen in other loss-making SOEs too. What kind of restructuring plan calls for mass layoffs unless investors are more interested in the enterprise’s assets than in resurrecting it?

Published in Dawn, June 6th, 2020

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