MUMBAI: The national auditor has rebuked Air India for violating norms to dole out performance-linked incentives to its employees for many years despite being a loss-making entity and adding to financial stress.
The Comptroller and Auditor General (CAG) observed that the national carrier did not follow any set procedure for pay revision or fixing of the performance-linked incentives (PLI).
"Audit observed that allowances and PLI ranged from 62% to 919% of the basic pay against the maximum of 5% as per Department of Public Enterprises guidelines," the national auditor said in its report. The national carrier has been running up huge losses since its merger with Indian Airlines in 2007. It had cumulative losses of more than 13,300 crore at the end of 2009-10 and it has 40,000 crore in debt. Its annual wage bill stands at 3,000 crore. This could have been 700 crore, or 23%, lower if the airline paid salaries in line with its financial health and performance, an Air India official said.
The Department of Public Enterprises (DPE) guidelines stipulate that a public sector company can distribute only 5% of its profits to its employees, which implies that no loss-making organisation can do so.
Though the Air India management has argued that these allowances had to be offered to control mass exodus of employees to private carriers, the auditor did not accept the reasoning. The company made excess payment of allowances and PLI amounting to 315.78 crore in 2007-08 and 2008-09, it said.
The CAG also found Air India board guilty of increasing various allowances, including PLIs, by up to 50% from January 2005 even though the company depended on loans for working capital.
In its reply to the auditor's observations, the civil aviation ministry agreed that the lack of rationalisation of salary has impacted the efficiency and productivity of the airline. Air India is yet to harmonise the salary structure after the merger with Indian Airlines.
It formed a wage rationalisation committee under retired Supreme Court judge Justice Dharmadhikari last month. Among other things, the committee will recommend ways to replace 14 agreements the airline has with its various workers unions with a single one. Jitender Bhargava, a former AI employee, said the human resources department of the airline unnecessarily conceded to whatever the unions demanded. "Interestingly, V Ferrera, who has facilitated the signing of multiple union agreements over the years, has been given a post retirement job by the management," he said.
Source: Economic Times
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