The Telecom Ministry will seek approval from the Election Commission to issue Cabinet note to MTNL and BSNL employees for offering voluntary retirement scheme (VRS). However, the final decision about this can only happen after the election. Apart from this, the retirement age of employees will also be reduced by 2 years. This plan will reduce 54 thousand employees in BSNL.
The Department of Telecommunication is preparing the note of the idea for the Cabinet, in which the recommendation of VRS for BSNL and MTNL employees above 50 years of age will be recommended. A senior government official told the reporters, “The department is preparing cabinet notes to bring VRS for BSNL and MTNL employees. The department will soon contact the Election Commission for approval to send the proposal to the Cabinet.
The number of employees in Bharat Sanchar Nigam Limited (BSNL) is 1.76 lakh, while MTNL has 22,000 employees. It is estimated that 16,000 employees of MTNL and 50% of BSNL employees will retire in the next five to six years. For BSNL and MTNL, the VRS can save Rs 6,365 crore and Rs 2,120 crore respectively. The department will issue a 10-year bond for VRS financing. In the case of MTNL, the salary ratio has reached 90 per cent, while in BSNL it is about 60 to 70 per cent.
VRS based on Gujarat model
Both telecom companies have urged employees to give VRS on the basis of Gujarat model. Under the Gujarat model, salary of 35 days for every service year completed to the employees and 25 days’ wages for the remaining service year for retirement was offered. When asked how many employees will come under this scheme, the official said that all employees above aged above 50 years will be there. He said that this is a voluntary scheme, so the actual number of employees can not be determined.
BSNL has approved three recommendations out of ten recommended by a government committee to bring BSNL back on track. These include reducing the retirement age of employees from 60 to 58 years, to bring voluntary retirement plan (VRS) and to speed up the allocation of 4G spectrum to BSNL. This committee included Professor Raksha Jain, Vishal Gupta and Ajay Pandey of IIM Ahmedabad.
By implementing the VRS and reducing the retirement age, 54,451 employees will be cut off in BSNL
With this, BSNL can save Rs 13,895 crore in the next six years. From VRS the company can save Rs 1,921 crore every year. However, to implement the VRS package, one lump sum amount of about Rs 13,000 crore will have to be spent. BSNL has been operating in losses since last several years and it has increased its losses due to Reliance Jio coming into the market. For the first time last month, the company did not pay salaries to its employees.