Mumbai/Ahmedabad: Despite 45,000 officers calling off plans to strike over salary issues, public sector oil companies remain far from relieved as attrition is soaring, thanks to lucrative pay offers from the private sector.
The ministry of petroleum and natural gas averted the promised strike in public sector undertaking (PSU) oil companies by agreeing to pay employees interim relief of between Rs60,000 and Rs1,20,000 per year, an amount accepted by the union.
The short-term measure, analysts agree, will likely do little to keep PSU employees happy, especially without the perks that private competitors can offer, from overseas travel to employee stock options.
“The talent pool in this sector is very shallow to begin with,” said Ronesh Puri, managing director of Executive Access India Pvt. Ltd, which specializes in recruiting for the sector. “As the sector grows exponentially in the coming years, the demand-supply gap is not likely to be met anytime soon. The PSUs will continue to bleed and lose people.”
Puri estimates that the attrition rates in the public sector could be in a range as high as 15-25%.
The government has already set up a committee to review salaries for the public sector oil companies, and a report is expected in a few months.
A study by human resources firm Hewitt Associates, done for PSU oil companies, found their executives typically earn 60-100% less than their private sector counterparts.
For the middle management, the average fixed pay at Rs9.44 lakh compared relatively favourable with the market median of Rs10.11 lakh. But for senior management, the average pay is Rs14.34 lakh, about 82% lower than that of the overall market. At the director level, the fixed pay is Rs17.87 lakh, a whopping 451% lower than the market, says the Hewitt study.
This, coupled with a short supply of trained personnel in the sector, has led to the movement of trained professionals to private sector players such as Reliance Industries Ltd and Cairn Energy India Ltd. Reliance, for one, is expected to begin production in the Krishna-Godavari basin by late 2008, while Cairn is expected to begin producing oil in Rajasthan in mid-2009. Reliance plans to double refining capacity by next year, and is scouting for trained personnel for its exploration activities around the Indian coastline. Public sector companies, too, plan to invest Rs269,049 crore to expand operations.
The Justice Mohan Committee, set up to review pay among PSUs more than 10 years ago, had recommended that compensation needed to be along the lines of government pay structures, while admitting market realities varied.
With below-market salaries, highly skilled professionals at ONGC Ltd and Oil India Ltd migrated in large numbers, joining private oil companies or different sectors all together. Retirees also found lucrative job offers.
“When the oil prices were low, the industry lost out on a whole generation of people who went to other industries such as IT and telecom. It is the effect of that loss we are seeing in today’s shortage of people,” said P.M.S. Prasad, president of the petroleum business at Reliance.
Rajeev Khanna, director of policy and corporate affairs at BG Group Plc., said all employers need to be innovative to retain talent. “Sometimes even an annual salary increase may be sufficient,” he said. “Mid-course correction, add-on bonuses, employee stock options and overseas assignments are a few measures that could bolster the compensation package.”