This story is from December 1, 2010

Cash-strapped AI to hike employees’ incentive pay

Manju V / Dec 1, 2010, 05:48 IST

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In an audacious move, Air India has decided to increase the incentives payable to about 2,300 of its officers from November onwards , putting an additional burden of about Rs 60 crore per annum on its wage bill.

Cash-strapped AI to hike employees’ incentive pay

MUMBAI: In an audacious move, Air India has decided to increase the incentives payable to about 2,300 of its officers from November onwards , putting an additional burden of about Rs 60 crore per annum on its wage bill. Increasing employee salaries instead of imposing wage cuts as demanded by the government is an inexplicable move for an airline, with a Rs 19,000-crore debt burden, which banks heavily on the taxpayer’s money for survival.
The government had infused Rs 800 crore in equity and the next package of Rs 1,200 crore is expected to be cleared in the coming months. The rider is that Air India (AI) should reduce its expenditure and especially slash its wage bill. Contrary to the government demand, the ill-timed , populist decision was taken on Friday with an MoU signed between Air India Officers Association (AIOA) and the AI management . The same day the airline chairman and managing director Arvind Jadhav directed that the hike in productivity-linked incentives (PLI) be implemented for the month of October (payable in November). The hike varies from 120 % (for deputy manager) to 30% (for assistant general manager).
In the coming months, the 2,300 AI officers, including managers, senior managers , deputy manager, assistant managers etc, will be paid arrears (dating from April 1 2010) in installments. The airline spokesperson refused to comment on the matter. Aspi Irani, general secretary of AIOA, also refused to comment. The merged airline has a total of about 32,000 employees.
According to airline sources, the reason for the hike was the huge disparity in salaries of Air India and the erstwhile Indian Airlines (IA) officers. “An AI assistant manager gets a PLI of about Rs 8,000, while his IA counterpart gets Rs 18,000. Similarly , an AI manager gets Rs 25,000 as PLI, while his Indian Airlines counterpart gets Rs 52,000,” said a source. Jadhav has been a failure when it comes to cutting the PLIs and bringing down the wage bill.
A few months ago, the CMD tried to push through a proposal to cut PLI by half, which would have saved him around Rs 700 crore annually. But following opposition from the unions, he backtracked. “When the airline CMD talks of rationalization of salaries, he is only talking of increasing salaries. Since the disparity between officer’s salaries in AI and IA is huge, every effort should have been made to reduce IA PLI by a fair amount so that AI officers don’t need to be given huge hikes,” said an airline official.