The dilemma that is the Steel Mills

The federal government has asked the Pakistan Steel Mills (PSM) to justify the retention of its employees, with the public-sector entity witnessing a virtual shutdown. It has directed the PSM management to invoke a 1968 law to cut back on the workforce and, with it, reduce the expenditures on employees. The directive comes after the Economic Coordination Committee (ECC) had already directed the lay-off of hundreds of daily-wage workers in an attempt to save money. The recent development, however, expands the scope of the lay-offs so as to include permanent employees as well.



The ECC has regularly approved salaries for PSM employees, releasing the amount despite the virtual closure of Pakistan’s largest industrial unit. Suspension of gas supplies and its failure to clear the dues it owed the SSGC has been the final straw for the public sector entity. In a recent interview, the chief executive of the PSM had said that the entity needed Rs9 billion just to see it through to June. The industrial unit has been incurring losses for a while now and it has suffered due to incessant oversupply of Chinese steel in the country as well as due to its outdated machinery and short-term strategies — a hallmark of Pakistani managers working for a state-owned entity.

Now, the federal government wants to settle the issue once and for all. It has been involved in a tussle with the Sindh government, which is unwilling to let the centre sell the PSM, but less-than-willing to do anything about sorting out the mess at the industrial unit either. No one appears to be willing to take responsibility for resolving the various problems faced by the PSM and not many buyers have shown interest in it. The PML-N now obviously feels that the solution is to start laying off employees, which could mean the virtual end of the PSM. We feel the PSM has taken the same path as that of PIA — running into losses and taxpayers’ money being pumped into it to bail it out, all to no avail. The government is choosing the easy way out here, but the fact remains that this will still not help it find a buyer for the PSM, which is the real dilemma it is facing.

Published in The Express Tribune, February 22^nd,  2016.

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