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Fleeting moments

June 22, 2020

Pity the taxpayers

Opinion

June 22, 2020

The chief justice of the Supreme Court expressed his annoyance over the huge number of surplus employees in the Pakistan Railways. A few days ago, he pointed out the dismal state of the Pakistan Steel Mills that closed down in 2015 but its employees were paid their salaries nonetheless. Now the most prominent – PIA whose CEO reported that the airline has been suffering a loss of Rs6 billion every month for the last many months. What really bedevils these state-run organisations?

It’s no secret that state-managed organisations incur losses to the extent of hundreds of billions. And whenever any of them posts a profit, people think the figures must have been fudged. What’s most responsible for the degradation and despicable performance of government owned organisations? Three factors stand out. First, politics of nepotism and cronyism; second, lack of accountability within these organisations; and, third, overstaffing. When lower cadres or higher executives are hired on the basis of nepotism and recommendations, they also know how to manipulate to stay above accountability when in trouble.

Let’s ask a straight question. Were the PSM a private entity instead of being in the public sector, would its management have continued to pay workers’ salaries amounting to Rs380 million every month? Especially, when the mills had not produced a single steel rod for half a decade. Would any businessman in his right mind continue to embrace such an organisation for so long? Since the government pays the salaries out of public tax money, taxpayers in all fairness have the right to question why their hard-earned money is poured into these perpetually loss-making black holes year after year.

In a recent meeting, the CEO of PIA said that 14,500 of the airline's employees had to be paid every month. Does the airline need so many employees for its thirty odd planes in the first place? Compare it with Singapore Airlines that has 140 employees per plane. Does the PIA management think that what 140 employees per plane of Singapore Airlines achieve in one hour, PIA’s four times more employees per plane would achieve in fifteen minutes? Wish the mathematics were true and PIA planes flew on the dot and the passengers enjoyed safe and comfortable flying experience.

The airline has more than 500 pilots to operate about thirty aircraft when few of them remain grounded. While PIA pilots enjoy high salaries and perks, pilots of some airlines in the US have to do a second job to support themselves. The PTI government in November 2018 sanctioned a bailout package worth Rs17 billion to PIA, which the then finance minister called a ‘dose of oxygen’, to keep the airline operational. How long will infusions of such large dosages have to be injected into PIA to keep it going? The taxpayers should know.

However, the PSM is not such a basket case that it cannot be revived. It can surely be, but certainly not by our own financial resources and management. Russia and China evinced interest and wanted to negotiate with the Pakistan government a revival offer for the mills. A meeting to this effect was held in October 2019 and attended by PM's Adviser Abdul Razak Dawood, Minister of Privatisation Mian Soomro and chairman of the Board of Investment. The prime minister was informed accordingly about the Chinese and Russian companies' offers. But nothing materialised out of the meeting and Russian and Chinese offers were apparently declined. Not responding to such offers tantamount to refusal.

The government should have done well by accepting either Russian or Chinese offer to take over the PSM. It would have generated employment and positively contributed to rejuvenate the sagging economy. Let’s consider it a writing on the wall that state-owned entities, especially PIA and PSM, will never turn profitable as long as these remain in state control. The nation witnessed so often in the past how every new management team that took over the two enterprises made huge promises, marked their time and left the organisations in more dilapidated conditions than they were previously.

The writer is a freelance columnist based in Lahore.

Email: [email protected]