Voluntary retirement: PTCL offers severance to half of its staff

Move aimed at cutting costs; scheme extended to 16,000 employees.

ISLAMABAD:

Pakistan Telecommunication Limited (PTCL) has offered voluntary pre-mature retirement to 16,000 employees or more than half of its existing workforce, in a bid to reduce its operational costs.

“The company is overstaffed and has very high redundancy… and in the existing telecom scenario we are competing with players who are very cost conscious,” said PTCL senior executive vice president Syed Mazhar Hussain on Thursday.

He said the company’s human resource cost is 22% of total revenues while this ratio in other telecom companies was below 10%, making it difficult to compete in the market. He, however, said that the company was still profitable, but was taking proactive measures to remain so in the future.

The voluntary retirement scheme has been offered to 16,000 employees – which is 53% of the 30,000-strong workforce, highlighting the company’s policy to rely more on technology and venture into advanced services.

Since Etisalat took over the management of PTCL, the current offer was the third Voluntary Separation Scheme (VSS) offered to the employees, which this time was offered only to employees of grade 1 to 17. In 2008, the company had offered VSS to 30,000 employees.

Husain said due to technological changes the posts of telephone operators, clerks, administration officers and assistants have become redundant. In these categories there were 9,500 employees. The company has also offered the VSS to 6,000 less educated and elderly employees.

Hussain maintained that the company did not lay off the employees in the past and will not do so in future. If the redundant staff did not opt for the scheme, the company would find out another solution, but no one would be sacked, he added.

Hussain said the total VSS cost has been estimated at Rs10 billion, which will be borne by the company. Since the government has 74% shares in the company, the maximum cost will be borne by the government. He said the PTCL board of directors has approved the scheme and the government was also on board.

He, however, said that there was a possibility that the company may not relieve all of the targeted 16,000 employees, as factors like the PTCL’s operational requirements and high VSS cost in individual cases would be the deciding factors.

Giving details of the financial package, Hussain said every employee choosing VSS would get at least Rs850,000. According to the company’s offer, the regular employees’ total package would be determined by keeping in view their basic pay, which would be multiplied by years of services and again multiplied by four. In some cases the basic pay would be multiplied by remaining months of service or in few cases 100% incremented basic pays would be offered, whichever was less. Besides, employees opting for VSS would also get Rs300,000 separation bonus, Rs250,000 medical bonus and housing allowance for twelve months in cases where the length of service was up to 20 years.

In cases where service was over 20 years, besides benefits equal to length of service there would be 5% enhancement on gross pension, Syed Mazhar Hussain said.

Published in The Express Tribune, July 27^th, 2012.