Coal India steps up outsourcing mining activities

Coal India's bid to cut-down its expenses on wages and rationalise its manpower structure while pursuing the ministerial directive to produce 908.1 million tonne (mt) of coal by 2020 has resulted in the company resorting to massive outsourcing of labourers.

During April-December 2015, the state-owned coal behemoth had paid Rs. 22,069.67 crore to its 3,26,000 direct employees while Rs. 3,853.04 crore was spent on wages to an estimated 2,90,000 labourers and other staff who are under the pay-roll of contractors.

Other contractual expenses accounted for another Rs. 3,853.04 crore.

“We outsource the greenfield projects mostly if the estimated life of the mine is short where investing in equipment and machinery isn't feasible. Also, when the direct wages are considerably high compared to outsourced one, outsourcing is an option”, a senior official in Coal India told Business Standard.

During the first three quarters of 2015-16, Coal India's expenses on direct employee wages and related benefits rose marginally by one per cent by Rs. 229.67 crore while its expenses on contractual workers rose substantially by 35 per cent at Rs. 999.12 crore.

Going forward, its expenses on direct wages and other employee benefits is likely to increase nominally after the new wage agreement is rolled out. Nonetheless, contractual expenses will continue to increase momentously.

During 1975, the year Coal India was born following nationalisation of coal mines, the company had over 6,50,000 staff on its payroll which reduced to 3,33,000 in 2014 and further to 3,26,000 following retirement and voluntary related schemes.

The company, however, didn't replenish the number of staff to the original.

“Every year, on an average 15,000 employees retire. In turn, we are inducting between 3,300-3,800 staff to fill in the requirement. It must be noted that at the time of nationalization, we had to induct staff more than our requirement which is now getting rationalised”, the senior official said.

The coal behemoth, as per its estimates needs 2,80,000 staff at the most to meet its operational requirements under the present cost structure.

However, opening and completion of new mines which will generate 743.14 mt of coal by 2020 requires to company to increase its strength of miner-workforce which the company is catering to by resorting to outsourcing.

According to another company official, the key reasons behind nationalization of the coal mines under Coal India was to extract coal in a scientific manner as well as ensure social security to the workers besides removing disparities.

However, with the pace of outsourcing picking up fast, the income disparity of the workers is increasing while trade unions allege social securities are not being looked into. As per estimates, the average monthly remuneration for workers under direct payroll is as high as 207.69 per cent in comparison to the salary of contractual workers.

As per trade unions in the company, as high as 52 per cent of the 492 mt coal mined during 2014-15 was carried out by contractual workers while this ratio is poised to increase to atleast 55 per cent in the ongoing fiscal year. The contribution from direct workers to total output had fallen from 35 per cent five years back to 18 per cent in 2014-15.

“Five years back, contractual employees accounted for about 40 per cent of the total production which has went up steeply now and will increase further in the coming days. Since the last 3-4 years, the number of contractual labourers has risen considerably”, S. Q. Zama, president of the INTUC-backed Rashtriya Koyla Khadan Mazdoor Sangh told this newspaper.

Trade unions are of the view that a ratio of 70:30 for direct and outsourced employees is desirable to retain Coal India's profitability while senior managerial officials in the company want to keep the ratio at 55:45.

Even as Coal India continues to save considerably on its wages cost to step-up its bottomline, trade unions throughout 2015 have been pointing out at this trend as a cause of concern which can culminate into strikes and other union-related militant activities to jeopardise coal production in the coming years.