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APR 23 2013

CIL Wont be a Minefield of Politics

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 23rd APR 2013

Over 1 lakh staff to retire in next four years;average age to come down to under 45 & lead to increased efficiency

Coal India Ltd will shed its most costly legacy of nationalisation of the 1970s in the next three to four years,when nearly 1 lakh of its 3.45 workers will retire,cutting costs significantly and making the monopolys operations significantly more efficient and productive.The retirement of more than a quarter of its workers will help the coal giant increase mechanisation and outsourcing of production and cut the average age of employees from 50 years to less than 45 years.All workers who had earlier registered with any private coal miner were given formal employment in Coal India when the sector was nationalised.Most of them had no formal education or even age certificates.These are legacy workmen which CIL inherited when coal production was nationalised way back in 1975.The lowest age of workmen inducted into the company during that period was 18 years.By 2017 all these employees,will have attained at least 42 years of service and will retire.

The total number of workmen,thus,will come down from 3.45 lakh now to about 2.5 lakh, CIL chairman,S Narsing Rao said.Apart from workmen,the company has nearly 20,000 executives on its rolls.As a result of the drastic decline in the number of workmen,the share of salary and wages in the cost of production is expected to decline from 46% now to anything between 35% and 40%.Considering a reasonable rate of inflation,total cost of coal production,as a result,is also expected to decline by at least 10% and per person productivity per shift is expected to rise from 4.5 tonnes now to at least 9 tonnes.Company officials admit that Coal Indias productivity is barely a third of the level in Australia.In 2012-13,Australia produced 425 million tonnes of coal with 1.55 lakh employees,including outsourced workmen.But we produced around 452 million tonnes with 3.65 lakh directly employed workmen and some 65,000 outsourced workers.With the reduction in workforce,the gap in productivity is expected to reduce by some notches, a director in the company said.Wages and salaries is the single largest component in cost of production of coal at Coal India.It was about 43-44 % some times back but has bounced back to 46% after the recent wage hike.

Following the retirement of a large chunk of workmen,CIL will strive for greater mechanisation and increased outsourcing of coal production.This is expected to increase productivity massively, a senior CIL director told ET.Coal India inherited 7 lakh workforce during nationalisation.In 38 years,it declined to 3.45 lakh.At the time of nationalisation,all and sundry were inducted into the company.They were mostly coal filers and coal cutters with no formal education.In fact,anyone who had his/her name registered with the private miners before nationalisation became Coal India employee even without any qualification or age certificate.I expect in the next four-five years this will drastically drop.Even if everybodys age was 18 years at the time of nationalisation,they cannot work for more than 42 years and should be retiring anytime soon.


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