In what might come as dampener for the entities planning to submit their expressions of interest (EoI) for acquiring Air India, a committee appointed to look into the HR issues of the airline has made some tough recommendations, as per a report in Live Mint.
The committee was set up by the government after the employee unions had strongly opposed the disinvestment by the government. The Civil Aviation Minister had gone on record that the new owner of Air India must commit a certain period of guaranteed employment to the permanent employees of the airline after takeover. The period he said can be negotiated. The recommendations of this committee go far beyond that. It says all permanent employees must be retained until they automatically retire. This means the new employer cannot sack a single employee from the airline after takeover.
Further, the committee has offered suggestions for a whole lot of largesse to the staff; leave encashment, gratuity, staff housing and even reservation for promotion and recruitment. The committee even wants the employees’ salaries to be revised upward before the government divests its stake in favour of the private entity.
The justification for continuing with the present set of employees till their superannuation, given by the committee, is more or less the same mentioned by the minister; the last ever recruitment made by the airline was in 2012. There are 9,426 permanent employees in Air India. Apart from them, there are 4,201 contract employees and 2,867 employees on deputation.
The only door left open by the committee is that these employees can be offered voluntary retirement in lieu, though the terms have not been specified. If the recommendations of the committee are accepted by the Ministry of Civil Aviation, it may lead to two issues. One is it may scare away genuine buyers interested in investing and turning the airline around. Employee costs are very critical to any service organisation and airlines are no exception. For all they care, high employee costs might have been one of the key reasons for the losses Air India has been incurring as the government found in the cases of BSNL and MTNL. It went about reducing the staff strength drastically in the telecom companies.
The other issue is all these payouts, if fully implemented, will add up to higher debts the airline is already burdened with. The committee has referred to a judgement by the Supreme Court in respect of arrears which also have to be cleared.
March 17, 2020 is the last date for submission of expressions of interest. It is worth watching how many investors come forward to accept the challenge.