In what can be seen as public sector units (PSUs) moving towards operational efficiency, headcount at the 10 most profitable PSUs has declined by a compound annual growth rate (CAGR) of 3.65 percent in the last six years, whereas employee benefit expenses have risen 2.25 percent, according to the companies’ annual reports.
Employee Benefit Expense refers to the total cost incurred by a company in providing various benefits to employees. In the context of PSUs, which are government-owned entities, employee benefit expenses encompass a range of benefits, including (but not limited to) salary and wages, contributions to the Provident Fund (PF), gratuity, medical benefits, employee stock options (ESOPs) etc.
The biggest drop in headcount was seen in Steel Authority of India (SAIL), at 4.26 percent.
Gas Authority of India Limited (GAIL) was the only one to register an increase in its headcount, at a meagre 1.21 percent.
To be sure, headcount here refers to on-roll or permanent employees and excludes off-roll or temporary/contractual workers hired on a project basis or for specific timelines. Companies such as Indian Oil Corporation (IOCL), and Oil and Natural Gas Corporation (ONGC) rely heavily on contractual workers, who can sometimes outnumber permanent employees.
In fact, the share of on-roll employment stood at 58 percent (8.41 lakh) of the total employment in central public sector enterprises (CPSEs) in FY 21-22, according to the Public Enterprises Survey. At the same time, the off-roll composition stood at 42 percent (over 6.21 lakh).
According to Aditya Narayan Mishra, MD and CEO of consultant firm CIEL HR, public sector enterprises such as Coal India (CIL) operate with a large workforce due to the labour-intensive nature of the industry. Conversely, some, such as SAIL, operate with a leaner workforce as a result of industry norms and the maturity of their automation journey.
“Workforce reductions are evident across most PSUs, indicating a drive for higher operational efficiency. Very few PSUs (GAIL, PFCL and NMDC) have grown their headcount, albeit at a meagre 1 percent annualised over the last six years, reflecting in the financial health of those organisations; also, it reflects the headroom available for optimising their performance and operational efficiency,” Mishra told Moneycontrol.
Interestingly, only IOCL and ONGC saw their employee benefit expense decline, whereas, the other eight PSUs have seen it rise, with Power Grid Corporation of India (PGCIL) leading at 7.79 percent.
Experts say the traditional ways of PSU working have undergone a significant change, with performance-based promotion taking centre stage rather than the number of years of service employees put in, especially senior ones.
“A lot of that performance-based system is going to come at a performance cost, because better professionals demand better salaries. That’s on the wage side. PSUs do a lot of cash-like components when it comes to benefits. The company car, the company driver, all of these are going to finally end up sitting somewhere in your books,” said Prabhash Nirbhay, Founder and Director of Flipcarbon, a consulting firm.
He added that even though the method of recruitment is still traditional, the compensation and benefits conversation has likely become more market-driven.
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