New Delhi: To fight accelerating attrition among its staff, public sector undertakings (PSUs) are lobbying the Union government to ask the Sixth Pay Commission to incorporate, for the first time, a differential pay structure favouring employees with technical expertise.
This lobbying is based on the findings of a study by Mercer Human Resource Consulting on behalf of the Standing Conference of Public Enterprises (SCOPE). “The Mercer study found out that there is a wide disparity between compensations given by the private and public sector companies. This is particularly true for the middle-level officials in the energy sector and, therefore, there is a need for differential salary compensation linked to the employee’s role and responsibilities in the organization,” said A.K. Balyan, director, human resources, Oil and Natural Gas Corp. Ltd (ONGC).
Even labour unions, traditionally opposed to differential compensation for people with similar years of experience, seem to be embracing the proposal. “Lets face it, it’s a reality that if we don’t pay skilled workers more we will lose them out to private players, as also multinationals,” said G. Sanjeeva Reddy, president of the Indian National Trade Union Congress and a member of Parliament. “Yes, it will create heartburn amongst non-technical staff, but they will have to live with it.”
Reddy said union leaders have already begun preparing their members to expect differential salaries in the Sixth Pay Commission. But private sector hiring consultants are not sure that paying different salaries to technical and non-technical staff will automatically fix the attrition issues in PSUs.
“In the energy sector, a 100% gap in the public and private sector salaries is an under estimation because private sector also offers other things such as offshore opportunities and a more challenging career,” said Soumen Basu, executive chairman, Manpower Services India (MSI), a wholly-owned subsidiary of Manpower Inc., a global executive search firm. “Our research worldwide shows that people don’t always leave for money.”
Among the key supporters of the proposal, ONGC, for instance, has been hit hard by rising attrition levels following a boom in the country’s energy sector. Three years ago, it lost 50 employees in a year. Last year, this number rose 600% to 300, of which around 225 were engineers with technical skills such as drilling oil wells.
Similarly, NTPC Ltd, Power Grid Corp. of India Ltd, Bharat Heavy Electricals Ltd have all been facing high levels of attrition. NTPC alone has, over the last one year, lost 100 engineers to firms such as Tata Power Ltd, Reliance Energy Ltd and Lanco Infratech Ltd, and expects that figure to double to 200 a year by 2012. It expects the attrition levels to rise significantly once the private sector power projects are fully operational and as these firms start poaching its operations and maintenance engineers. Power Grid lost around 50 engineers to private firms last year. Bhel also lost 50 engineers last year and expects the numbers to double in FY08.
The director finance at Power Grid with additional responsibility for human resources, J. Sridharan, says: “We have to take stock and do a review keeping the competition in mind. In the present competitive market, variable salary dispensation is a good suggestion and a must.”
Once the Mercer report is submitted, SCOPE, with individual PSUs, will approach the department of public enterprises (DPE), the government arm that oversees public sector administration. In turn, DPE is likely to make a representation, on behalf of all its units, to the Sixth Pay Commission, which is due to submit its report by April. “We’ve already written to DPE. We’ll have to work out a way so that a drilling engineer gets more than his (non-technical) counterparts in the firm,” said Balyan.
While an ONGC mid-level engineer gets an annual compensation of about Rs12-15 lakh, private sector exploration and production firms, such as Reliance and Shell, are willing to pay more than double of that. “Our issue is that even if 10 people in critical areas, such as drilling engineers with three-four years experience leave, it will be several years for the other employees, who are not in those areas, to develop these expertise. This attrition levels will affect our operational activities,” said Balyan.