Friday, September 24, 2010

Air India wants to re-negotiate wages

The cashstrapped Air India wants to renegotiate wages with its 35,000-odd employees and is looking for a clearance from the highest level of government through a more carefully worded cabinet note.

Since the issue of wage reduction is a political hot issue, the note prepared for Rs 1,200-crore equity infusion into the carrier has opted for more careful term to re-open wage agreements with unions. 

This note has been circulated to the planning commission and the finance ministry for their comments and a final version will be sent to the Cabinet Committee of Economic Affairs next month. "Earlier we were hoping for a 15% saving in the annual Rs 3,500 crore wage bill. Now there are no such targets. We just want political clearance from the highest quarters to renegotiate wages so that this move could be considered if all other moves to augment revenue and cut costs fall short of what's required to save the Maharaja," said sources. 

Aviation minister Praful Patel recently ruled out any wage cut for AI employees. His logic: The move could cause great heartburn and outweigh any cost-saving it would otherwise achieve. AI chief Arvind Jadhav, whose strained relations with aviation ministry top brass are common knowledge and who is learnt to be reporting directly to higher authorities like the PMO, had also ruled out wage cuts in recent media interactions. "This move has become even tougher as the national carrier has hired a chief operating officer with an annual pay package of close to Rs 3 crore with Rs 2 crore as fixed pay and Rs 1.1 crore as variable . AI Express is also looking at hiring COOs at fancy pay packages. In such a situation , how can they justify cutting wages of others?" asked an airline insider. 

However, senior ministry officials said wage cuts are last option that would be resorted when everything else fails. "An issue concerning AI is going to the highest level of government, the cabinet . So we will seek in-principle permission for some other things also but that does not mean we will do it," said an official. 

Source : Times of India.

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