Supreme Court to take up plea against PSM sackings on June 9

Mills tells apex court it decided to lay off 7,784 employees on April 15

ISLAMABAD: The apex court is going to take up a petition on June 9 filed against the PTI led federal government recent decision to sack all the employees of the country’s largest industrial project – the Pakistan Steel Mills (PSM).

Chief Justice of Pakistan Gulzar Ahmed on Friday constituted a three-judge bench to hear the petition. The bench, headed by the CJ, will also comprise Justice Ijazul Ahsan and Justice Mazahar Ali Akbar Naqvi. The SC Registrar Office also issued notices to all respondents including the PSM management.

The Economic Coordination Committee (ECC) of the Cabinet – the country’s top forum for economic decision making – on Wednesday decided to terminate all 9,350 PSM employees, taking a giant but politically difficult step to stop years long hemorrhaging instead of reviving the giant industrial unit.



The ECC also approved to give due monetary benefits to the employees along with one-month salary that will cost the exchequer Rs18 billion to Rs19.7 billion. On an average, every sacked employee will receive Rs2.3 million.

“The ECC gave go-ahead to a ‘full and final’ human resource rationalization plan for the PSM employees in accordance with the judgements and observations of the Supreme Court of Pakistan and other courts hearing the cases involving the PSM,” announced Ministry of Finance on Wednesday.

The process to take the PSM – the country’s largest industrial unit with 1.1 million metric tons production capacity – out of the public sector began in June 2015 when the then PML-N government decided to stop production.

Since then, the federal government has been paying salaries to the employees but the mill has remained closed. After coming into power, the PTI government decided to revive the PSM and struck its name off the privatization list. But it again added the PSM in the privatization programme last year.

Neither the PSM could be privatized nor the government tried to revive it.

The PSM's total expense on its employees in 2018-19 was recorded at Rs9.54 billion that is 75.7% of total production and operating expenses, according to Ministry of Industry and Production summary.

The industry ministry was of the view that due to poor financial condition of the PSM, the government has been paying net monthly salaries to its employees since 2013.

The PSM stopped its commercial operations in June, 2015 without formulating any human resource plan for its 14,753 employees. The number of PSM employees has declined to 9,350 in 2019.

Out of total, only 250 employees would be retained for a period of four months for the execution of the employees’ retrenchment plan and other necessary work. All other employees would be issued termination notices and the financial impact of the plan would be Rs19.657 billion, said the summary.

However, the secretary finance was of the view that the compensation cost should be capped at Rs18 billion instead of Rs19.7 billion.

The ECC members said this will be the final compensation cost and the government should formally terminate the employees once the plan was also endorsed by the courts aimed at avoiding any additional cost due to court judgements.

In addition to retirement related compensation, one month salary would be paid to the PSM employees from the approved supplementary grant on account of salaries of the PSM employees.

The monthly net salary bill of PSM employees is Rs350 million, adjusted as loan in the financial accounts of the PSM. Since 2013, an aggregate loan of Rs34 billion has been extended to the PSM by the government on account of net salary payments.

Privatization of the PSM was one of the reasons behind a tiff between the former military ruler General Pervez Musharraf and the judiciary then headed by CJ Iftikhar Chaudhry.

The Supreme Court on June 24, 2006 halted the process of the PSM’s privatization and declared the letter of acceptance issued to the Arif Habib Consortium by the Privatization Commission and the Share Purchase Agreement as void and of no legal effect.

The court had also directed the federal government to constitute and activate the Council of Common Interest (CCI) expeditiously as far as possible but not later than six weeks on the issue.

Musharraf administration irked by the verdict filed a reference against Justice Chaudhry at the Supreme Judicial Council (SJC) before terminating all judiciary by promulgating emergency rule in Nov 2007.

PSM report

In a report recently submitted to the apex court, the PSM management said its human resources board took the decision to lay off 7,784 employees in its meeting held on April 15. It said the PSM has the capacity to employee just 1,000 workers.

According to the report, the mill will have to pay around Rs40 billion to its existing and retired employees. It said the mill was closed in 2015 in view of the losses it incurred from 2009 to 2015.

It said in 1990 the PSM employed more the 27,000 people. This number has reduced to 9,350 in 2019. The PSM management also requested the court to order authorities to appoint the chief executive officer (CEO) of the industrial unit, which has no CEO for the last one year.

The report also requested the court to order the law enforcement agencies help remove encroachments on the PSM properties and lands. It also asked the court to order the government to immediately pay all the dues of the employees in case of their termination.