Memorandum on Wage Revision

Leaders of the United Forum met the CMD, BSNL on 07.08.2008 and presented the Memorandum on Wage Revision. They requested the CMD to get the necessary approval from DoT so that wage negotiations in BSNL can start early.

UNITED FORUM OF BSNL UNIONS

BSNL EMPLOYEES UNION

NATIONAL UNION OF BSNL WORKERS (FNTO)

BSNL WORKERS RASHTRIYA UNION

TELECOM EMPLOYEES PROGRESSIVE UNION

ALLINDIA BACKWARD CLASSES TELECOM EMPLOYEES SANGATHAN

UF/Wage Revision Dated: 24.07.2008

To,

The Chairman & Managing Director,

Bharat Sanchar Nigam Limited,

BSNL Bhawan,

New Delhi

Sir,

Sub:-Submission of memorandum on the demands pertaining to wage revision w.e.f. 01.07.2007.

We are enclosing herewith a memorandum on the demands pertaining to wage revision, with effect from 01.01.2007. We may submit supplementary memorandum if required, at a later stage.

It is requested to start negotiation on these demands, immediately, without any further loss of time.

Yours sincerely

Sd/-Sd/-

[V.A.N.Namboodiri][K. Vallinayagam]

General SecretaryGeneral Secretary

BSNLEUNUBSNLW (FNTO)

Sd/-Sd/- Sd/-

[S.P. Sharma] [V. Subburaman][A.D. Patil]

President General SecretaryGeneral Secretary

BSNLWRU TEPUAIBCTES

Memorandum on Wage revision

INTRODUCTION

The declared vision of BSNL is “to become the largest telecom service provider in South East Asia” and the mission is “to provide world class – state of art technology telecom services on demand at affordable price” and “to provide world class telecom infrastructure to develop the country’s economy.”

In consonance with the declared vision and mission, BSNL is exploring its best to establish an era of information explosion. Day after day, changes introduced in terms of technology go to establish the rapid growth and introduction of new services by the company for the benefit of users. The system is constantly undergoing changes with innovations and increased use of fast developing technology.

Besides handling a variety of infrastructure by sophisticated handling techniques, the constantly undergoing changes with new innovations and increased use of fast developing technology, added with exposure to stiff market competition, the workers are required to ensure efficiency and productivity, within the limited resources left at their disposal to achieve the vision and mission of BSNL.

As a Public Sector Enterprise it is the declared policy of BSNL towards the society, particularly as a social responsibility, to strive to provide a balance between the provision of universal service to all uncovered areas, including the rural areas, and the provision of high level services capable of meeting the needs of the country’s economy, encourage development of the telecommunication facilities in remote, hilly and tribal areas of the country.

It is needless to pinpoint that when it is necessary to provide equal level playing field for all players, it is also equally important to provide an equal level playing ground for the workers in the matter of wages in comparison with other PSUs and in comparison with the executives in the PSUs.

“The single most important factor to achieve efficiency combined with productivity is motivation of the workers, and to create a sense of satisfaction in employment.”

In this connection it is relevant to note the importance of Central Public Sector Enterprises (CPSEs) in the economy and society and the place of BSNL among the CPSEs.

THE ROLE OF CPSEs IN THE ECONOMY AND SOCIETY

We are proud that Central Public Sector Enterprises (CPSEs) including our BSNL are playing an important and praise worthy role in developing Indian economy and society.

When India achieved independence, it was facing problems like predominant agricultural economy with weak industrial base, inequalities in income, low level of employment and wages and savings, regional imbalances, inadequate investments and infrastructure facilities. Indian big capitalists have not come forward to invest in large-scale industries and infrastructure like railways, telecom, heavy machinery, electricity, petroleum, airports, ports, shipyards etc. These industries require enormous investments, which were not available with the big capitalists. Moreover, investment in these sectors will not yield quick returns, unlike industries producing consumer goods. However, the Indian big capitalists wanted this infrastructure since without the infrastructure and machinery, their industries in private sector cannot develop. However, the big capitalists in America, England etc were against industrial development and self-reliance of India. They have advised the Indian Government through their Governments to concentrate on agriculture only. In such a situation, the big capitalists in India wanted the Government itself to build the infrastructure and heavy industries. Hence the Indian Government has started public sector and public sector industries with the money collected from the people through taxes, duties etc. The socialist countries at that time headed by Soviet Union helped in building the public sector industries. The Indian big capitalists have utilized Public Sector for their development. They have got enormous profits as suppliers of raw materials and other intermediate goods to the Public Sector and as contractors to the public sector. Besides, they have got products and services of the public sector at cheap rates. After thus developing themselves by using and misusing public sector for several decades and gathering enormous money, the Indian big capitalists wanted to loot the highly developed public sector, in collaboration with the foreign big capitalists. They wanted to buy public sector companies at cheap rates in order to get enormous profits. That was how the liberalization, privatization and globalization policies were initiated by the Government of India in 1991 and the process of privatization of Public Sector Units has started.

However, there was a big resistance to this privatization policy. Trade Unions have struggled against these policies. The left and democratic forces have opposed these policies. Several times the people have defeated the strong proponents of these policies in the elections to the parliament and assemblies. The present UPA Government was compelled to announce in its Common Minimum Program that the profit making PSUs will not be privatized. It was also compelled to abolish the Ministry of disinvestments. Whenever the UPA government tried for disinvestment of profitable PSUs, there was strong resentment from trade unions, people and left parties and sometimes even other political parties, and the Government was compelled to withdraw such proposals. This shows how the people are appreciating the role of the PSUs in the economy and society. This is because the Public Sector is the foundation for the self-reliance of our economy. It has helped to reduce regional inequalities. It has provided jobs in considerable number to the people. It has developed the infrastructure of the country. It has carried out its social responsibility and helped in developing backward regions. It has helped the cause of social justice by providing reservation for SC/ST sections of the people in jobs and promotions. It has helped in developing the science and research and technology. It has developed the skills of its personnel. It has contributed significantly to the exchequer. Compared to this, the role of private sector has no significant and bright aspects except for acquiring enormous profits at the cost of the people.

At present (as on 31.03.2007), there are 247 CPSEs (Central Public Sector Enterprises). In the year 2005-06, they have contributed around 11.12% to the GDP (Gross Domestic Production) at market price. The investments in CPSEs was Rs.29 crores in 5 enterprises on 01.04.1951 and as on 31.03.2007 it was Rs.4,21,089 crores in 247 enterprises. The turnover of CPSEs has increased from Rs 2, 76, 002 crores in 1997-98 to Rs.9,64,410 crores in 2006-07, recording a growth of 337%. The net profit of the CPSEs has increased from Rs.13582 crores in 1997-98 to Rs. 81550 crores in 2006-07, recording a growth of 599%. The dividend paid by the CPSEs to the Government in 1997-98 was Rs.3609 crores and it increased to Rs. 26805 in 2006-07 recording a growth of 643%. The total contribution of CPSEs to the Central exchequer (includes dividend, taxes, duties, interest, fee, charges etc) in 2005-06 was Rs.1,25,465 crores and it increased to Rs.1,47,635 crores in 2006-07 recording a growth of 17.68%. In comparison, the leading private sector corporate M/S Reliance Industries Limited has earned a net profit of Rs.11943 crores and paid a dividend of Rs.1440 crores only in 2006-07.

The reserves and surpluses of CPSEs went up from Rs.3,59,181 crores in 2005-06 to Rs.4,16,469 crores in 2006-07, recording a growth of 16% whereas, the reserves and surplus of Reliance Industries Limited (the leading private corporate industry) was only Rs.62514 crores in 2006-07.

The enormous reserves and surpluses available with the CPSEs could be utilized for developing productive assets. However, the Government is not allowing this.0ut of these huge reserves and surpluses available with the CPSEs, only 4 % (Rs.17383 crores) was used as financial investment during 2006-07. The reason for keeping this huge surplus and reserve of CPSEs unutilized is only to sell the profitable CPSEs at cheap rates to the Indian and foreign big capitalists and to handover to them these huge reserves and surpluses as bonus. It is to be noted that VSNL was sold to Tata’s for a mere Rs.1320 crores and along with it, its cash reserves of Rs.1200 crores were also handed over.

The Government’s statement that the IPO/disinvestment of profitable PSUs was needed for mobilizing funds for the development is not true because as detailed above, the PSUs are having huge reserves and surpluses. This statement was intended to conceal the real intention of selling PSUs at throwaway prices to the Indian and foreign big capitalists. That is why Trade Unions are opposing disinvestment. We oppose the recommendation of the second Pay review committee (appointed for submitting recommendations on revised pay structure for executives in PSUs) for partial disinvestment of PSUs. It is nothing but starting privatization of PSUs in phased manner. Trade Unions are demanding withdrawal of any proposal of disinvestment of PSUs and to use the reserve and surplus for their development.

EMPLOYMENT IN CPSEs

While the investment, turn over, profit, dividend of the PSUs are increasing in a big way and their contribution to the central exchequer is increasing continuously and significantly, the number of employees in the CPSUs is decreasing. The total number of employees in CPSUs excluding contract/casual labor was 19.59 lakhs in 1997-98. Even after addition of about 3.5 lakhs of DoT employees absorbed in BSNL, the total number of employees came down to 16.14 lakhs in 2006-07.

SHARE OF WAGES IN THE TURNOVER OF CPSUs

The per capita emoluments in CPSUs were Rs.1,29,582 in 1997-98. It increased to Rs.3,25,738 in 2006-07. However, the share of wages as % in turnover has come down significantly from 19.19% in 1997-98 to 5.45% in 2006-07. This shows that the employees in the CPSUs have created more wealth but without proportionate increase in wages.

WAGE REVISION IN CENTRAL PSUs

Different methods are adopted for salary revision of executives and for non-executives. While wage revision of executives and non-unionized supervisors is done through a Pay Revision Committee appointed by the Government, the wage settlement of non-executives is arrived through bilateral negotiations between the management and the unions. The last wage settlement (6th round) was w.e.f. 01.01.1997. In the case of BSNL opted DoT/DTS/DTO employees, the last revision was w.e.f. 01.01.1996, i.e. 11 years ago as per recommendations of 5th Central Pay Commission. The present one is the 7th round of negotiations.

6th CENTRAL PAY COMMISSION

The Government constituted the 6th Central Pay Commission with Justice B.N.Srikrishna as Chairman vide Resolution No.5/2/2006-E III (A) dated 5th October 2006 to examine and recommend structure of pay, allowances and other facilities / benefits for the Central Government employees. The 6thCPC submitted its recommendations on 24th March 2008.

2nd PAY REVISION COMMITTEE FOR EXECUTIVES IN CPSEs

The Government of India vide Resolution dated 30th November 2006 under No.2 (10)/06/DPE-WC issued notification appointing a Pay Revision Committee with Mr. Justice M.J.Rao, Retd. Judge, Supreme Court for recommending the pay, allowances, perquisites and benefits for the executives in the Central Public Sector Enterprises. The committee submitted the recommendations to the Government on 30th May 2008.

ABNORMAL DELAY IN STARTING THE WAGE NEGOTIATIONS FOR NON-EXECUTIVES

While the VI Central Pay Commission for Central Government employees and Justice M.J.Rao Committee for the executives in CPSEs have submitted their recommendations on 24th March 2008 and 30th May 2008 respectively, the negotiation for the non-executives in the BSNL has not yet started on the plea of the management that approval for the same has not been received from the Administrative Ministry, i.e. DoT, so far.

7th ROUND OF WAGE NEGOTIATIONS AND DEMANDS ON BASIC ISSUES

The 7th round of wage settlement is to be effective from 01.01.2007. The Central Government and DPE have issued certain guidelines for negotiations on the wage revision of non-executive employees vide DPE OM No. 2(7)/2006-DPE (WC)-GL-XIV dated 9th November 2006. It was stated that the management of CPSEs would be free to negotiate the wage structure for the unionized workmen keeping in view and consistent with the generation of the resources/profits by the concerned enterprises. It was also stipulated that the validity period of wage settlement would be for ten years with 100% DA neutralization w.e.f. 01.01.2007. The revision shall be subject to the condition that there shall be no increase in labor cost per physical unit of output with rare exceptions. Certain other conditions were also stipulated.

The Committee of Public Sector Trade Unions (CPSTU) was very critical of the guidelines issued by the DPE and after comprehensive deliberation in its National Conventions formulated the following demands on basic issues:

No to disinvestment/privatization and contractorisation/outsourcing in PSUs

Tenure of the wage agreement should not be more than five years. Relativity between workers and executives in pay and benefits turned widely adverse during last round of wage negotiation must be restored.

Annual increment system as percentage of basic pay to be calculated cumulatively every year and the pay scale should be open ended.

Wage rise for the contract workers in PSUs ensuring at least the minimum wage and benefits available to the permanent workers in all the respective PSUs.

Merger of DA equal to 50 percent of the basic pay with effect from 01.04.2004.

Financial and policy support for revival of sick PSUs and wage revision for the concerned employees.

Filling up of all vacancies for workman category in PSUs through fresh recruitment of regular workers.

Notice was also given for a one-day strike on 7th May 2008 on the above demands.

PERIODICITY

In Public Sector Undertakings, wage revisions have taken place every 5 years until 5th round of wage revision. However, after the 6th round of wage negotiation w.e.f. 01.01.1997 a 10 year period was brought in to effect unilaterally making the 7th round of negotiation due from 01.01.2007 only. This has resulted in serious erosion of wages for the employees. Hence, the issue was taken by the CPSTU with the Government.

A meeting was held by Hon’ble Prime Minister with the representatives of National Trade Unions on 28th April 2008 and it was assured that the 10 year period of wage agreement can be modified as 5 year agreement with full neutralization, on the basis of which the strike was deferred. The DPE guidelines on 5 year wage agreement was issued vide DPE OM No.2(7)/06-DPE(WC)-GLVI dated 1st May 2008.

MERGER OF 50% IDA W.E.F. 01.01.2005

The Central Government employees were granted merger of 50% CDA w.e.f. 01.01.2004. In the case of employees of Central PSUs the IDA crossed 50% w.e.f. 01.01.2005. As per DPE Guidelines vide OM No. 2(7)/2005-DPE(WC)-GLIII dated 26th February 2008, BSNL Management issued orders for merger of 50% IDA for its employee’s w.e.f. 01.01.2007 only. BSNL employees are eligible to have 50% merger of IDA w.e.f. 01.01.2005, when it crossed 50%.

INTERIM RELIEF

The wage revision is due w.e.f. 01.01.2007. Even after 18 months, wage negotiation has not started for the non-executives. In the meantime, both the VI Central Pay Commission as well as the 2nd Pay Revision Committee for Executives in PSUs have furnished their reports in March and May 2008 respectively. The delay in starting negotiations and settlement is resulting in great loss to the workers.

Taking the above aspects into consideration, several PSUs have either granted Interim Relief or an advance amount so that the employees are not put to financial loss. The Staff side feels it justifiable that an amount of 50% of pay subject to minimum of Rs.3000/- be granted as Interim Relief to all non-executives employees.

BSNL IS ONE OF THE BEST PSUSs BUT PAYS LESS TO ITS EMPLOYEES

A study of 11 PSUs – BSNL, MTNL, TCIL, ONGC, BPCL, HPCL, IOC, NTPC, Power Grid, BHEL and SAIL was made for the financial year 2005-06. Various parameters enabling a comparative study of these 11 PSUs are given in the annexure as tables 1 to 5.

BSNL got the MOU rating “excellent” along with ONGC, HPCL, IOCL, Power Grid, BHEL and SAIL whereas MTNL, TCIL, BPCL and NTPC have got the MOU rating “very good” (Table-1).

BSNL tops among these 11 PSUs in case of Gross Block, Net Block, Reserves and surpluses, capital employed and number of employees (Table-1)

BSNL is in 2nd position in case of net profit among these 11 PSUs (Table-1). In fact, BSNL is in 2nd position among the top 10 profit making PSUs (Table-3).

Among these 11 PSUs, BSNL is in 5th place in case of net revenue after IOCL, BPCL, HPCL and ONGC (Table-1).

BSNL’s share in total 225 PSUs is 19% in reserves & surplus, 18% in Gross Block, 19% in net block, 15% in capital employed, 13% in PBDITEP (Profit before depreciation, interest, taxes, extra ordinary items and prior period adjustments), 13% in net profit, 20% in number of employees and 4% in turnover.

The rate of gross surplus created in these 11 PSUs is given in Table-4. This is arrived at by the formula PBITEP/WAGES X 100. PBITEP is the gross profit after deducting depreciation cost. The cost of labor power is indicated by the wages and the gross surplus created by the labor power is indicated by PBITEP. In the rate of gross surplus in these 11 PSUs, BSNL is better than BPCL and IOCL in the Oil Sector and closer to BHEL and SAIL.