PSM’s persistent woes

Attempts to achieve cost cuts through laying off workers on daily wages will not amount to much

There is no doubt that privatising loss-making state-owned entities is the PML-N’s toughest predicament. The country, however, is divided on the potential benefits of privatisation and attempts to railroad through such measures often invites serious backlash. However, all agree that restructuring of these entities needs to take place first before a third party can be invited to buy a stake in them. The Economic Coordination Committee, in its recent meeting, has tried to take such a step — but it seems nothing more than a feeble attempt at reducing costs for the Pakistan Steel Mills (PSM). While approving two months of salaries for the PSM’s employees, it also directed the management to lay off those who work on daily wages. The move is said to be aimed at reducing costs of the sick unit that is currently working at only one per cent capacity. Boasting a workforce of around 15,000, the PSM has been unable to stand on its feet since it became victim to politicisation and inefficiency.

However, attempts to achieve cost cuts through laying off workers on daily wages, who are not exactly paid huge salaries in any case, will not amount to much. Pakistan’s largest industrial unit and a legacy of the fallen Soviet Union, the PSM will not be able to turn around its fortunes after one small dose of cost-cutting. It needs to pay off billions in dues to the SSGC — the main reason why its recent attempt to increase capacity utilisation hit a break — before gas pressure to the steel mills is restored. Little seems to have been done to resolve that serious issue. When the Chinese examined the affairs of the PSM, they blamed an inefficient management for its woes. What they did not say was that workers on daily wages needed to be the first to go. The fear that workers on the lower tier, and not those responsible for the sorry affairs of the PSM, will be told to take a hike has now gained weight. Laying off a few hundred workers will not reduce costs by much, and at the same time will also convey the intentions of a government, which too many times in the recent past, has appeared to have run the country like a business.

Published in The Express Tribune, January 31^st, 2016.

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