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ISLAMABAD: Pakistan Steel Mills (PSM) has approached the Supreme Court for retrenchment of its employees and direction to the federal government to appoint full-time Chief Executive Officer (CEO).

"We intend to terminate 7,884 out of 8,884 employees," said a report submitted by the PSM management, Friday.

A three-judge bench, headed by Chief Justice Gulzar Ahmed, will resume hearing petition of PSM chairman and others vs Muhammad Zardad Abbasi and others from June 9. The Economic Coordination Committee (ECC) Wednesday approved firing all the employees of the PSM, reasoning that the mills have not been functioning for years and the employees have not been doing anything.

The report said that the PSM Board approved the plan as described by the Board Human Resource Committee (BHRC) minutes dated 15 April 2020 to rationalise the PSM workforce.

The board has also requested the Ministry of Industries and Production to send a summary to the ECC on behalf of the federal government to make arrangements to pay the retirement and termination dues of the employees.

It has requested the court to direct the government to immediately appoint CEO in order to look after day-to-day affairs of the mills as well as to oversee the execution of the employee rationalization plan.

The report stated that for more than a year, the mills was run without a CEO.

However, an additional charge was given to a ministry official.

It has also asked the apex court that the illegal occupants in the Steel Town may kindly be vacated immediately under the supervision of the Supreme Court with the help of police and Rangers.

It further requested that all pending litigation for and against PSM may kindly be decided within one to two months.

According to the PSM management till March 25, 2020, the mills is involved in around 671 case pending in various judicial and quasi-judicial forums, which includes 29 cases in Supreme Court, 320 in high courts, and 181 cases in civil and District and Sessions Courts, National Industrial Relations Commission in 112 cases.

According to the report, the BHRC has discussed the situation in all aspects and also proposed to amend summaries, to figure out the savings and opportunity cost, towards rationalization plan to be finalized by adding more material, explaining the rational and the benefits to privatization.

The BHRC suggested to make changes for more clarity, such as monthly impact that provides the full picture i.e. including retirement liability and other monthly costs, like, transport, electricity etc.

In addition, the BHRC asked for payback period to be calculated and detail of opportunity cost arising out of re-renting of residential units of Steel Town at prevailing market rates.

The expenditure incurred on the monthly salary bill of employees as well as accrued against various integrated heads of accounts has sky-rocketed and spiraled out of control, though way to late, serious consideration are required to bring about a semblance of rationality to the wages and other expenditures of the PSM.

The current proposal from the government is to proffered for consideration by the board to cut down on the mills' expenditures through rationalization of the grossly overstaffed mill, and in the process also rid the facility of unsuitable employees.

The PSM was established for manufacturing and sale of iron and steel products.

It is situated on 18,642 acres, out which 10,000 acres were retained for Steel Mills inclusive other industries, while 8,000 acres allocated for Steel Town.

The PSM had accumulated profits in excess of Rs26.2 billion and operated at over 75 percent capacity utilization during 2004-2008.

However, since 2008 the mills has been running losses every year.

At present the PSM is in a shutdown state bearing heavy losses, which has resulted in accumulated liabilities, thus causing huge deficit issue for both the government and the organisation.

The mills was completely shutdown in 2015 and remain closed to date.

At the time of shutdown, the mills had approximately 15,000 employees. The salaries of these employees have been paid by the federal government as an interest bearing loan, resulting in total accumulated debt of Rs229 billion by end of 2019.

According to the report submitted in 1990, the mills had 23,873 regular and 3,700 contract/daily wages workers, which in 2019 reduced to 9,151 regular and 199 contract/daily wage workers.

The report says that a typical mill of this size never has more than 500 to 1,000 employees.

Till today, approximately Rs30 billion from the date of closure has been paid to the employees for net salaries (excluding benefits and retirement dues etc).

The balance/debt of in service employees' liabilities related to retirement dues (provident fund, gratuity and leave encashment) is approximately Rs20 billion, and employees liabilities of already retired people is Rs20 billion.

Since 2008, the federal government has paid to the PSM Rs92 billion for all liabilities in the form of employees' salaries, bailouts etc.

"The projected losses to the national exchequer are Rs229 billion as per the PSMC balance sheet," says the report.

Copyright Business Recorder, 2020