Uncertainty looms as government announces plans to terminate 9,350 workers
Workers are not buying the federal government’s plan to terminate their services and privatise the Pakistan Steel Mills (PSM).
In a meeting presided over by Prime Minister Imran Khan on June 9, the federal cabinet had endorsed the Economic Co-ordination Committee’s (ECC) earlier decision to privatise the PSM, under a ‘retrenchment plan’.
The plan envisions terminating 9,350 PSM workers after paying them around Rs 20 billion in compensation. It calls for retaining 250 employees for a period of 120 days, while other employees are issued termination notices.
Also on June 9, a three-member bench of the Supreme Court of Pakistan, comprising Chief Justice Gulzar Ahmed, Justice Ijazul Ahsan and Justice Mazahar Ali Akbar Naqvi, deferred hearing on petitions filed against the planned termination of PSM workers.
The unions representing PSM workers have ‘rejected’ the federal government’s decision, particularly the compensation amount.
According to government figures, the financial impact of the plan will be around Rs 19.657 billion. The amount will be needed in a single tranche to pay gratuity and provident fund dues to PSM workers. Additionally, they will be paid a month’s salary. Thus, the average payment to each terminated employee will be around Rs 2.3 million.
A press release issued after the federal cabinet meeting stated that the cabinet had given the go-ahead to the plan as “the prime minister was of the view that the burden of sick state entities should not be put on people’s shoulders”.
Talking to The News on Sunday, PSM Insaf Labour Union president Yaseen Jamro condemned the decision and called the compensation amount “peanuts”.
“We won the referendum for the collective bargaining agent on the back of promises by Prime Minister Imran Khan and Planning Minister Asad Umar to revive the PSM. Now, after coming into power, the PM has taken a U-turn instead of fulfilling his campaign promise. He needs to know that this decision touches the lives of thousands of families,” says Jamro.
The Pakistan People’s Party (PPP) and the Muttahida Qaumi Movement-Pakistan have also criticised the federal government’s decision. However, so far PSM workers have been protesting without visible support from any political party.
Federal Minister for Industries and Production Hammad Azhar has hailed the retrenchment plan, calling it a step in the right direction. “The PSM has become a white elephant. It is a huge burden on the national exchequer. If we want to revive the industrial unit, it is essential for the government to move away from an ‘owner and operator’ mode to that of an ‘owner and policymaker’ mode and include the private sector in the challenging task of reviving the Steel Mills,” Azhar has said.
His ministry had earlier informed the Supreme Court of Pakistan that successive governments had provided Rs 58 billion in bailouts to the PSM since 2008. The apex court was also informed that the PSM had stopped commercial operations in June 2015 without formulating a viable plan for its 14,753 employees.
“In 2019, the number of employees came down to 8,884, with 2,233 officials and 6,651 workers. The government spends Rs 355 million per month on the salaries of the PSM staff. The amount does not include leave encashment, provident fund and gratuity,” the ministry report had said.
The workers say the government is marching out the figures only to justify their termination and to sell off a state asset.
“How can the government impose a decision on us without any prior discussion? Every worker is as much a stakeholder here as anyone else,” says Pakistan Steel Association leader Mirza Maqsood. “There is a number of dues that haven’t been included in the proposed package. The government has not cleared the dues of the retired employees since 2013. Who will pay them now?” he asks.
“The workers don’t believe that the government will pay each of them Rs 2.3 million. According to the golden handshake rule of 1991, the government is required to pay four times the amount a worker gets on retirement in such a situation. How will they determine the seniority of workers in making the payments? Some of us have been working here for decades, while others are relatively new. It is naïve to think that the government will be generous enough to hand over the promised amount to every worker,” he adds.
Asim Bhatti, the Pakistan Steel Labour Union (PASLU) chairperson, says that the Rs 19.6 billion grant is not enough to clear the dues.
“In times like these, when there is disease and hunger all around, where can the workers go if they lose their jobs? We, the laborers, don’t have backup plans, savings or properties. We appeal to the government to be considerate,” says Jamro, a PSM worker
“The peanuts are being offered for the media. When you add up pending retirement funds, vendor dues and gratuities, the figure it yields is Rs 80 billion. The proposed package is too little. Everyone involved is worried. The popular perception is that in the end the workers will get measly amounts.”
“The main focus of the government should have been to revive the PSM, as promised repeatedly by Prime Minister Imran Khan. They earlier signed a memorandum of understanding (MoU) with the Russian government for expansion, rehabilitation and modernisation of the mills. However, the government has not done anything in this regard so far,” he said.
The Sindh government has also entered into the fray by announcing its opposition to the proposed privatization plan on the grounds that it has not been consulted.
Sindh Minister Saeed Ghani has said that the federal government could not proceed with the privatisation without the approval of the Council of Common Interests (CCI).
In a recent Senate session, PPP leader Raza Rabbani, too, claimed that the cabinet was not authorized to make decisions on the future of state-owned companies. “This is a matter of conflict of interests as a government minister and an adviser are themselves in the steel business,” he said.
However, Zafarullah Khan, a constitutional expert, points out that the CCI has already given the go-ahead to the privatization of the PSM.
“In August 6, 2006, the 11th CCI meeting had approved the privatization of the PSM. The then prime minister Shaukat Aziz and chief ministers Pervez Elahi, Arbab Ghulam Raheem, Akram Khan Durrani and Jam Yousuf had attended the meeting,” Khan says.
“According to Article 154-7 of the Constitution, if the federal or any provincial government is dissatisfied with a decision of the CCI, it may refer the matter to Majlis-e-Shoora (Parliament) in a joint sitting whose decision in this behalf shall be final. No one has challenged the decision for 14 years,” he adds.
Besides loss of their jobs, PSM workers are worried about the loss of housing. “The status of our housing is in limbo. We have been paying installments for plots in Steel Town. If they terminate us, they should at least give us alternative land in the Malir Development Authority’s approved Phase-4 project,” says Jamro.
“In times like these, when there is disease and hunger all around, where can the workers go if they lose their jobs? We, the laborers, don’t have backup plans, savings or properties. We appeal to the government to be considerate,” he says.
Economist Kaiser Bengali says the plan is a façade for handing over PSM land to housing developers.
“This is not a revamp; it is a wrapping-up exercise. I believe that the government is not telling the truth. The land will likely be used for housing colonies. This has happened in the past in the aftermath of the privatisation of Javaidan Cement and Zeal-Pak Cement. Steel is a strategic commodity.We should not import it because market fluctuation will always put us in the negative. The retrenchment plan doesn’t make sense at all. The government must tell us what it plans for the steel industry. Right now, they seem clueless,” Bengali says.
“It appears that this is being done with the hope of securing investments from China. There appears to be an assumption that the Pakistan-China Investment Board may invest to kick-start the now-dead PSM. It appears far-fetched to assume that any foreign country – even China – will invest a billion dollars abroad at a time when the world economy is expected to shrink by five percent. The government is trying to facilitate the business elite at the expense of the workers,” he concludes.