ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Social Implications of Voluntary Retirement Scheme

The impact of voluntary retirement schemes has had wide-ranging impact on the nature of employment, and is changing the quality of workers' lives. One of the effects is the increasing casualisation of labour. This article examines the nature of change in the quality of life among workers who have accepted VRS, locating some of the problems in the context of the employers' attitude to VRS.

This is a sociological study of the Voluntary Retirement Scheme (VRS). It focuses on the metropolis of Mumbai, urbs prima in India and the sixth ranked mega-city of the world. Mumbai has had the bulk of employment and factory jobs and has always been represented among the great cities of the world. Today, a large number of unviable firms in Mumbai have closed down. Casualisation of labour, contract labour, ancillarisation of production and subcontracting of work is rampant. The state government has done little with regard to rehabilitating and redeploying labour. The social impact that this loss of job has on the family and the community at large is immeasurable.

This study seeks to understand the impact of the VRS on the life of its recipients and how the changing productive and labour market structures brought about by the economic policies of the government affect the family, kinship and community relations and how the family as a unit responds to macro-processes and macro-policies introduced by the government. It also analyses the sociological impact of occupational change; that is how the self-worth, the self-image, the dignity of workers is distorted when a skilled worker, who has prided himself on his skill for years, is compelled in the post-VRS phase to do an unskilled job that he dislikes intensely, has lesser social value and which hurts his self-esteem. Blue-collar workers, it has been found, were unable to join the productive mainstream, they find it extremely difficult to get redeployed because of inadequate training. This unskilled force is then compelled to join the unorganised and the unprotected sector. An attempt has made to show what casualisation of labour means to a worker who has known regular employment.

We have tried to examine the impact of the VRS on women workers and the ways it affects them. This depends to a great extent on the type of job women were doing prior to taking the VRS, That is, women in white-collar jobs were better able financially to cope with unemployment at this stage of their life. However VRS affects women from poorer households who are compelled to work in various low productive activities as part of their survival strategy. Women are affected not merely as producers (and often have to compete with old-age group VRS recipients for low-skilled jobs) but also as consumers. They are doubly disadvantaged, firstly as members of the underprivileged class and secondly as members of the underprivileged sex. We found that VRS recipients do not necessarily get self-employed. Instead a large number of them join the unorganised/unprotected sector. Can their wages ensure that their children get a better education or are they compelled to join the ranks of the poor? This is a question which should concern Indian society at this point of time.

While there are broader factors linked with VRS such as the wholly inadequate attempts of the government at rehabilitation and redeployment of VRS recipients or at disbursement of the National Renewal Fund, or again the use of ingenious strategies used by employers to reduce the labour force, or again how VRS is seen by the worker as a mere pay-out when the employer wants to get rid of him and how there is a mental rejection towards the Voluntary Retirement Scheme, this study is primarily an ethnographic account of the recipients.

It is through a series of case studies that we have tried to explain the sociological impact of VRS. The strength of the case study approach lay in the fact that when looking at the sociological impact of the voluntary retirement scheme on workers in Mumbai, we could investigate the processes – the policy of the government, the policies of the various industrial firms towards the scheme, the reactions of trade union leaders, management consultants and voluntary retirement scheme recipients – and how all these are interrelated; all this over and above giving a detailed description of what the facts of the situation are with respect to the voluntary retirement scheme. The next section will deal with the case studies which are bases on unstructured interviews and observation. In the concluding section we will analyse their implications.

Data was initially collected through a questionnaire administered to a range of VRS recipients. Later, after analysis of the questionnaires, we found that the information procured from the respondents was to a large extent uniform and repetitive. The respondents seemed to give standard replies to the queries, especially those in which opinions were sought. This method of obtaining data thus proved inadequate and we decided to supplement the quantitative data collected through the questionnaire with interviews and observations of some of the cases. Most respondents were initially suspicious and seemed to think that we were present there to find out if they had received more than Rs 5 lakh as compensation. They were thus hesitant to talk frankly. A few others were hopeful. They hoped that we could give them alternate employment.

These were certain facts which came to light. We observed a subtle bonding amongst VRS employees. The anxiety they experienced seemed transparent, anxiety that this was the end of the road for them; their reluctance to get into self-employment as this would mean stepping into the unknown; their unwillingness to take up another job in the informal sector, which they believed would lower their job-status in their own eyes and in the eyes of their family, their relations and neighbours. The greatest advantage of using the questionnaire together with the face-to-face interview was that not only reactions to a statement, but attitudes towards VRS could be learnt. Since most of the interviews were conducted at the homes of the respondents we could also observe the other members of the family and their relationships.

Each new phase of the investigation reflected what we had discovered so far, with new angles of investigation and new avenues of enquiry to be explored. For example, often our respondents would suggest that it would be useful for us to talk with other respondents if we needed to be further enlightened in a specific area of my subject. The relevance of the second set of respondents and the value of the information, thus obtained, was immeasurable. Most of the accounts narrated by the respondents were free-flowing accounts, respondents were often explaining their patterns of behaviour – for example, why they eventually opted for the VRS – and this gave us an insight into their motivations and actions, an insight not afforded by other exploratory techniques.

Not only were VRS recipients from large multinational companies selected, but also from smaller firms. Hence, VRS recipients from older and bigger units (which were pushing through modernisation plans determinedly in order to drastically cut down the workforce and resorting increasingly to the use of contract labour or subcontracting of jobs) were studied, as well as VRS recipients from smaller units in the Thane-Belapur area which had shut down illegally. Group interviews were also conducted with firms which, at the peak of their profitability, had asked their workmen to remain at home with full wages for a period of one year and to report at the factory after a period of 12 months. Again VRS recipients were selected from some companies, which had completely shut down their operations in the main business areas and had shifted their production to remote areas, scattered all over India. In these areas blue-collar workers, with no organised union support, were recruited on much lower wages and on different terms and conditions of employment.

 

Case Studies

 

 

In this section, we have discussed some of the case studies.

Mr J, a skilled worker, worked for 16 years in a factory in Mumbai. The management of this multinational had declared a lock-out in June 21, 1988. The lock-out was lifted in 1989. He states that “after the lock-out was lifted in 1989, we workers were victimised in many ways to make us take VRS. My foreman used to allot me work of grades lower than mine. I found this difficult to do. He also said I was not fit for the job. The factory doctor used to also harass me saying I had high blood pressure, saying that my blood was ‘infected’ and so on. I felt that my self-respect was being assaulted. So I opted for VRS in November 1989. I received a lumpsum of Rs 1,46,000 plus Provident Fund and Gratuity totalling Rs 42,000. From this amount, I have paid my loans, got my daughter married and spent on my medical treatment.”

This worker has four sons and a wife to support. So he says, “I started to hawk fruits on the streets from 1990 onwards till almost June 1999”, when his health failed completely. Today he somehow ekes out a living from the earnings of his sons, aged between 21 and 32 years, who get occasional work. One of his sons got a job in an industrial estate through an agent who took a monthly commission of Rs 500. He soon left, as after the deduction of commission to the agent there was hardly enough for his travel and food. Today, he bitterly regrets having taken VRS. If he had not resigned then, he would be earning a monthly salary of Rs 8,000 today.

Christina worked as an executive secretary of a large pharmaceutical concern, for more than 30 years. She was earning Rs 11,800 per month when she was offered the option of VRS. She was almost 52 years old, had three married daughters and one unmarried son. As she narrated her experience to me, she seemed visibly pained. She was loyal to her company, had put in years of service and she was unable to fathom the ‘tacit disapproval’ of her continuation in office by the management. She said that for almost six months, her immediate boss would pass hints that she should stay at home and look after her grandchildren. She had seen her colleagues, other secretaries being almost compelled to take VRS. She sought the advice of her husband and opted for the VRS.

Christina has a supportive husband who was a very senior executive in a corporation and who was doing extremely well financially. But she experienced a great deal of trauma, during the period of six months when she was mentally harassed by her boss. “I spend my leisure time looking after my grandchildren”, she said, but with a deep sense of rejection and betrayal. She meets other VRS employees as well as some of her ex-colleagues. Her firm has not shut down completely. I met her on several occasions. She said she missed her routine, she had a lot of spare time on her hand, her children were grown up, they had their own lives to lead. She felt a deep sense of regret at having taken VRS.

When we spoke to M, a former factory worker, we found him a cripple with slurred speech. “Taking VRS has been like smashing your own leg with a boulder” he told us. He was working in a factory warehouse in Mumbai for 14 years. In May 1989 he took VRS. This was because during the 10 months of the lock-out declared by the management, he had got into a lot of debt. He says, “I was tense and worried that I would have to pay back loan amounts with interest. So when during the lock-out period the management sent letters to most of the factory workers to take VRS, I took VRS despite the union leaders pleading with me to be patient and not give up my job.

“On hearing that I gave up my job, my wife was angry and she took me to the warehouse manager. We both pleaded with him to take back my resignation and the total VRS amount. He refused to relent, he said that he would not help me as I was an active member of the union. I had received a lump sum amount of Rs 1,88,000 plus Rs 40,000 as provident fund and gratuity. I paid off my creditors and with the remaining amount I bought a self-contained room in Navi Mumbai. The rest of the money I finished off in living expenses over the next two years.

“By 1991, I was left with no money so I took up a job as a watchman in a housing society on a salary of Rs 1200 per month. I got more depressed and took to drinking. My wife killed herself by setting herself on fire and then my world went to pieces. I lost the will to live. I could not cope with my children, so my unmarried sister, who works in a printing press, took my sons to live with her. I sank lower and lower into misery and fell from the running train twice, once in 1993 and once again, in 1996. Because of the accidents, I cannot speak properly and walk with some difficulty and my movements are not co-ordinated too well.

“To enable me to have some income, I rented out my room at New Bombay and live at my brother’s house. Workers with families should never give up their jobs like I did. What is the point of bringing children into this world if you can’t provide for them ? My elder son had successfully completed his 10th std and wanted to go to college, but I couldn’t offered it. So now he works as a courier boy. I regret the day I gave up my job.”

Farida…was working as a skilled worker in a liquid packing department of a pharmaceutical concern for more than 30 years. She was around 50 years of age, a widow, and had a college going son who was 22 years old. She was earning Rs 8,500 per month at the time of VRS and had received Rs 5 lakh as compensation. She was ‘rudely shocked’ when she learnt that she was selected to be given the VRS. Her firm has not closed completely but over the years, groups of people were being got ‘rid off’ though the VRS. During the time of her trauma, Farida was helped by her friends both emotionally and financially. She believes that her pharmaceutical firm had closed because it was ‘mismanaged’. The owners were now seeking foreign direct investment and joint collaborations and were therefore keen to downsize their workers. After VRS, she was compelled to reduce her monthly expenditure by 25 per cent. Farida feels dejected she is more than 50 years old. She is not even searching for employment. She hopes her only son will educate himself and stand on his own feet.

The questions which now arise are: Is voluntary retirement really voluntary? Do workers voluntarily resign and leave? If the worker chooses to voluntarily retire, then why are firms inclined to offer inducements to the workers to make him accept the voluntary retirement scheme?

A large multinational company which has its factory located on prime land asked 2,500 of the workmen to remain at home with full wages/salaries for a one-year period, effective January 1, 2000. One year’s wages amounting to Rs 3 crore was paid in advance and the concerned workmen were asked to report at the factory after a period of 12 months, the company said. It is interesting to note that this company was at the peak of its profitability. During the same period of time it bought over a government venture manufacturing food products. This company has a virtual monopoly as regards most of the products it manufactures. It needs increased production and its ability to pay and compensate is enormous. The company continues to manufacture those items, in respect of which the company holds a licence, at a place away from the main city. Meanwhile, the prime land it held was sold and now a huge shopping complex stands on it.

We also met 14 workers of a petroleum multinational who had been sitting idle for the past one year. On the November 6, 1998, the management of this multinational shut down their plant and godown which is on prime land in the heart of the city. The management told 40 of these workers that there was no more work for them. Eight workers fell prey to the atmosphere of insecurity and panic created by the management. They took VRS and left. Others resisted.

These workers were told by management and we quote them, “we don’t need you, you may sit at home, we will send you your wages, your bonus, and all your dues, tell us if you want it by cheque or by cash.” For the past one year, these workers have been sitting at the gates of the factory. This particular case study has given us an insight into the prevailing general situation in industry. Such steps taken by the management have created a great deal of panic and insecurity in the minds of the individual workmen.

The leader of this group of 14 workers, is Ashok Y, around 35 years of age, who worked as a security guard. He informs us that the management has brought in contract workers as security guards. He appears very worried, “what if the wages are suddenly stopped?” Many workers he says “have taken loans and half the amount of money received as salary is spent towards the repayment of loans. A worker can hold out for two to three months then he will be compelled to accept VRS, as he cannot continue to be in debts.” Subhash expresses his fears: he had taken a loan to buy a house. Will I be forced to take VRS? He asks the union leader who is also present when we were talking to him. His co-workers chide him. It is imperative that he saves money, they say. The union may bail him out for a few months; they will also try and help him, but he must not give in to the threats of the management. Bala was working in the delivery department for 30 years and has 12 more years to retire. He earns Rs 12,000 per month. He is tired of sitting idle, and so he tends to the company’s gardens every morning. But how long will this go on? He asks. Yadav from Uttar Pradesh has not visited his family in the village for the past two years. It is important to maintain discipline, he informs me and report at the gate every morning or else the solidarity amongst us workers will be broken. Arjun W is not yet dispirited. He was a ‘mukadam’ in the filing department for almost 30 years and has six more years to retire. He asks his union leader who has just walked in what will be the next step? Will we move the court if our wages are suddenly stopped? What if a worker retires whilst the case is in court? Will he get all his dues?

They all reassure their union leader that they are resisting the coercive methods of the management. They are willing to hold out. Arjun tries to convince his union leader to hold talks with management immediately. He says “our company has announced dividends to their shareholders. They are not running into losses. Why do they say there is no work for us? You as a union leader must argue with our management.”

There is a lurking fear in the minds of these workmen. One year, no work, and full wages have been given. Will their case go to the court? How long will the court case take? What kind of an impact can such measures have in the mind of an individual and then on his family set-up? It shows how macro-processes and macro-policies introduced by a government, without much thought of its wider implications, can impact micro-level processes at the family and household level.

On our visits to the Employees’ Assistance Centre (EAC) run by the Confederation of Indian Industries (CII) at Maharashtra Institute of Labour Studies (MILS), we had occasion to meet with several VRS recipients. A woman, aged about 35 years, had worked in the packing department of a pharmaceutical concern situated at Andheri (East) Mumbai for almost 13 years. In 1994, the entire packing department was shut down. The company offered her a compensation of Rs 5 lakhs and some additional inducements in gold. I met her several times at the MILS. She had initially used the money she received to purchase a flat at her native place. Although she missed the company of her friends, she believed that VRS was a blessing in disguise as she could now give more time to her daughter. But three years later she decided to do a desktop publishing course and help her sister-in-law in her typing and printing business, run, from the home.

She missed the camaraderie and friendship of her co-workers and still met with other VRS employees. In fact several of her friends would often go to the location of their old factory to see what had become of it. It was with a great deal of pain and anguish that she told me one day that the structure of her old building factory, had been pulled down completely. It was our face-to-face interview with her, which enabled us to validate the data I had earlier collected from her where she had said that VRS was a blessing in disguise. She was stating the ideal situation, not the real one. She missed her workplace dearly, but she had accepted VRS because she had feared that her firm was being sold to another company. She was afraid that she would then be forced to leave the company with no dues at all.

We met a group of seven workers, all belonging to a pharmaceutical company situated in the central business district of Mumbai. Hemraj B was a skilled worker, who lived close to his factory. By March 1996 he was earning Rs 8,000 per month. He, together with several other workers, had resisted the coercive methods used by the management to get rid of them through the VRS, but when the factory closed down completely he was compelled to accept VRS along with 300 other workers from the firm. He was barely 42 years old then. He did not want to become a driver. He was more ambitious than his other three friends; also skilled workers, who were finding it extremely difficult to find re-employment. They were reluctant to take up jobs which offered Rs 1,500 as salary. They had tried their hand at self-employment and failed. They were extremely worried about their future. They had repaid their debts, invested their money in land in their native place. However, their children were at school and they were unable to answer the probing questions of their neighbours as to why they had not found work again.

As we were conversing with them, three of their former bosses walked in. These senior officers were visibly embarrassed. These men were post-graduates in science, between 35 and 40 years old and had spent 17 years in the pharmaceutical firm. They were sent by their pharmaceutical firm along with 28 other officers to set up the factory at Indore. On their return from Indore, they and other officers were kept idle for three months. In January 1997, they were asked to take VRS. All three of them, seemed to be very bitter about the experience. The skilled workers had come to the EAC with a hope that the CII would help them find re-employment.

They all seemed apprehensive about the future. They feared that they would be unable to provide for their families and in particular the continuing education of their children. The counsellor at the EAC suggested to Hemraj that several skilled workers like himself could come together and run ‘units’ which are running at losses. Mr N informed Hemraj that at Wagle Industrial Estate at Thane, there was a unit where workers could start a ‘workers cooperative’ by pooling in Rs 40 lakh. However, none of the four skilled workers present seemed to be interested in this venture.

On probing we learnt that earlier some of their co-workers had ventured into something similar and had failed; they stated that travelling from the main city into Thane would be very difficult for them; workers, they said, have got used to high salaries, subsidised meals, a union always fighting for good working conditions for them. They would find it very difficult to start from the very beginning.

The picture that emerged was that after acceptance of VRS, the euphoria of being in possession of such a large amount of money is short-lived, it dies due to boredom. Two men, aged about 50 years had worked in the stores department of the Bombay Port Trust for years. One of them, on getting the VRS amount, had purchased a fishing trawler. But he had failed in this business. He believed that it was the government ban on fishing trawlers operating in a particular area, that had led to him suffering losses in his business. He had approached the EAC. He did not know what to do next. He came along with his friend, on learning that he could avail of Rs 3,000 doled out for rehabilitation.

The second person had a definite goal in mind. He wanted to purchase an autorickshaw and drive it himself. He lived at Mazgaon in Mumbai, where autorickshaws do not ply, but would conduct his business in Nasik, from where his wife hailed. He was also considering the option of learning agarbati-making, phenyl-making etc, and then trying his hand at self-employment. He appeared enterprising and didn’t seem bitter, he just wanted to get along with his life after VRS. He looked forward to a better future.

A man, aged about 40 years, had worked for 18 years as a process operator on strip machines in a large and reputed company situated at Kanjur Marg. In the year 1993, 927 workers were given VRS. Their factory had then shifted to Goa. A great deal of the manufacturing of their products had also moved into the small-scale sector and he informed me that his company had sub-contracted the making of some of the personal products like toothpaste to smaller units in Dharavi at Mumbai. But none of his co-workers were given work there, as the management was not willing to pay them their high salaries.

Subhash G had studied up to the junior Bachelor of Commerce degree and had earned Rs 4,100 per month when he opted for VRS. For the past four years he has been working in private firms. He has worked at a travel agents firm on a salary of Rs 1,500 per month. He is now completely disillusioned at the low salaries being offered at these firms. He visited the EAC at the MILS, with details of a computer course he wished to learn. The course fees were Rs 5,600. He had learnt that he could avail of Rs 3,000 for retraining through the NRF loan. He would then purchase a personal computer and take private orders for data entry work.

Shyamrao G H, resident of Thane, worked as a plant operator, earning Rs 4,200 per month at phosphorous plant of a private limited company at Thane, Belapur area for five years. The plant had almost shut down, as no manufacturing was taking place. But it was a strong and militant union which made the employers continue to pay wages. Shyamrao himself was kept sitting idle in the factory for two years. The employer had used various strategies to get the workers to leave. They had stopped payment of electricity bills and the workers were compelled to sit within the premises with no electricity. Eventually he took VRS and received Rs 2,70,000 as dues which included gratuity and compensation.

He is a well-dressed man, has a working knowledge of English, and has studied up to SSC. He is embarrassed and tells me that he will now be forced to work as a driver. He also explains his deep feeling of insecurity and anguish to us. He does not know where to begin, how to go about seeking employment. The man who has accompanied Shyamrao, was older. He was more composed. He had worked for 21 years at the above-mentioned firm. He expressed a hope that he would earn at least Rs 3,500 per month as a driver. He was less anxious, about the future. He was no doubt bitter like Shyamrao about his experience but he seemed to be more resigned to his fate.

Several others whom we met were machine operators, skilled workers from the Thane-Belapur belt whose factories had been closed down. Their employers had used all strategies and ruses to trick them into acceptance of the VRS. They had feared they would be forced to leave with no dues at all and had therefore accepted VRS reluctantly. Several of them had come to the EAC to get the amount of Rs 3,000 to learn driving so that they could then drive autorickshaws. They were feeling insecure about seeking a new job, about self-employment and were embarrassed to work as drivers. They however had children to feed and educate, rising prices of essential commodities to deal with. Most of them had received between Rs 2 and 3 lakhs as compensation though some of them were yet to receive the amount. They were bitter about their experiences, but seemed to be resigned to their fate like Subhash D G.

 

Social Implications

In this section we will analyse the implications of the voluntary retirement scheme. Every interview that we conducted, revealed something of great significance. If the VRS is to achieve any success, it should be as the name indicates voluntary. But interviews with the workers indicated that they see VRS as a mere ‘payout’ when the employer wants to get rid of them. This makes the worker very anxious and pained about accepting VRS. No efforts are ever made by the employer to mitigate their anxieties and aid in their rehabilitation. The emotion of pain and anxiety can be well understood, as a vast majority of them interviewed had almost 21-25 years of service. To them this long length of service indicated a deep sense of loyalty to their workplace.

Again, from a sociological viewpoint such long service would mean ‘low labour turnover’ and ‘weak mobility’ and this could only be explained in terms of the trust shared mutually by the worker and the organisation. However, when faced with no other option, VRS is no doubt accepted hesitatingly and reluctantly. The initial reaction is mental rejection towards acceptance of VRS, and this is a strong indicator in most cases. Most workers, when interviewed lacked, a detailed knowledge and understanding of the VRS scheme. Most of them were unsure of the total amount of terminal benefits they were to get. But what is most significant was that amongst almost all of the VRS recipients, I observed a lack of care to find out details of the total amount to be received as terminal benefits. The reason for the hesitation in accepting VRS appears to be fear: (a) The major fear appears to be the loss in earnings; (b) the workers also fear a loss of ‘facilities’ that generally accrue to a person when one is working; (c) the credit facilities that a worker has access to when working, are lost, on acceptance of VRS; (d) a worker finds it difficult or rather he is unable to handle such a large amount of money; (e) he/she begins to experience a sense of unworthiness amongst his/her peers; (f) they begin to believe that they are unable to do anything productive; (g) the prevailing sentiment that he experiences is one of doom; (h) his colleagues who had accepted VRS earlier generally advise him that accepting VRS means impending doom; and (i) the realisation dawns on him that he might be unable to provide for his family, in particular, the continuing education of his children.

All this has been clearly substantiated by the interviews that have been conducted, the numerous case-studies that have been done.

Finally, however it is fear about the future, which is the key to the acceptance of the voluntary retirement scheme. This aspect, fear of one kind or another, has led an individual to take the voluntary retirement scheme, has also been clearly brought out by a study which was conducted by the Maniben Kara Institute of Labour Studies. This study showed that 62 per cent of the workers interviewed stated that they did not accept the scheme on their own free will, but out of fear of one kind or another. The fear was the threat of retrenchment, closure and lock-out. A further analysis of the survey conducted by us indicated that a large number of the respondents were in the senior age group (50-59 years) who were almost due for retirement. This group of people have a few more years to retire and want to leave the company with the best terminal package that they can get.

Although from personal interviews, it was observed that in a large number of cases the union was making attempts to negotiate with the managements of various companies for a better VRS package, the workers were unwilling to wait for a negotiated settlement; which seemed uncertain. Many of them preferred to accept the existing VRS package offered by the company. Many of the employees had children/daughters to be married off and many had debts to be repaid. VRS appeared attractive as it offered the immediate prospect of money.

In a society geared to the central value of work, retirement frequently means a loss of status and the absence of routines that may have structured an individual’s life for years – it creates a void difficult to fill. Retirement spells the loss not only of a job itself but also of contact with others at work.

The distinct picture that emerged from the responses of the recipients was that they experience a sense of rejection, of betrayal by a firm/company with which they had shared a mutual trust over long years. Since the worker had put in such a long period of service, it would be in the fitness of things that industrial enterprises build up the confidence of the workers (to meet the realities of the outside world) and the VRS recipient should not feel that the employer is merely getting rid of him. But this is indeed the general feeling of most of my respondents.

The worker felt that he was ‘tricked’ or ‘fooled’ into accepting VRS and this explains the feeling of shock that many of the respondents said they felt, when they learnt that their firm was to be closed. Employers could have got their workers to accept VRS by establishing early adopters of VRS as examples, to ‘potential adopters’. Workers complained that instead various other ruses and strategies were being used by employers. Many workers were not given work for months, the electricity bills in certain firms were not paid so that the workers would then complain or the employers would then threaten the workers with closure of the firms; many of the workers who were not willing to take VRS were often intimidated by thugs or are often forced to resign.

This explains the response of some of the respondents, that they were indeed relieved and relaxed when they learnt about the closure of the firm. An important finding from my quantitative analysis was that most of them were unwilling to talk about VRS. This was particularly so amongst those respondents whose firm has closed partially. They were perplexed, confused and often embarrassed to explain why they had been particularly selected to accept the VRS. On probing, a few women stated that since they were from a higher age-group, that is, above 45 years of age, they may have been selected by the management to accept VRS.

Many of them said that they were then happy with their decision to accept the VRS scheme as it gave them more time to be with their children and family. But women were not necessarily stating the real reason for acceptance of VRS. They were rationalising their acceptance of VRS. On further probing these women stated that since their children had grown up and did not really need looking after at this stage, they were also getting involved in some kind of social work activities and doing some kind of religious work. Many of the employees ‘expressed regret’ at having accepted VRS. They stated that in retrospect they realised “that it was mistake” and it was ‘merely circumstances’ which made then accept VRS then. Many of them said that they were compelled to accept VRS and they had no other choice. In some cases there appeared to be a tacit disapproval of their continuation in office by management. In other cases they were afraid that the company would shut down completely and they would lose all their money. For others, the amount of money to be received as compensation was a temptation as they needed it because of ‘some pressing needs’.

What is also significant is that no training for redeployment was made available to the VRS recipients either by the employer or his/her union. Nor did the individual worker seek retraining to upgrade his skills, when he was found redundant. Further no kind of counselling or investment advice seemed to be given to the VRS recipients, except in a few firms where a half-day session or a one-day session on ‘investment patterns’ was held. This indicated us, total apathy on the part of the trade union towards workers; a lack of concern on the part of the employer and a feeling of ‘helplessness’ and impending doom and ‘finality’ on the part of the workers.

It is imperative that we quote ad verbatim the responses of at least some my respondents to a very significant question of whether they would recommend VRS to other employees. The respondents who said they recommend VRS, stated:

– “Before the company closes down it is better to take what the company gives, rather than stay jobless without any benefits”.

– “A female employee who had worked as a skilled worker for more than 30 years in the liquid package department of a pharmaceutical concern, believes that after VRS, her social status has changed for the better. She is not seeking re-employment, but spends her time looking after family affairs”.

– “A white-collar female employee aged between 50-59 years, who worked in the service sector stated “After a particular age especially for women it becomes difficult to work at office and at home due to physical ailments. Some other responsibilities of children also comes to their shoulders especially after the marriage of their children.”

– A few respondents stated “this amount received through VRS, is useful in times of disasters – you can repay debts; you can spend on the marriage of your children, etc.

– Some of the respondents stated that “ladies should accept VRS if they are above 50 years of age”.

– Still others stated that “one should accept VRS if it become unavoidable because of the government policy, one could then reinvest the amount of money got through terminal benefits and take up another job.”

– A woman, 50-59 years of age said that she would recommend VRS to other employees as she has noticed that the attitude of her children has changed seeing her at home, most of the time. They have become more attached to her. She however also states that her neighbours are curious to know the reason for her accepting VRS. It is this change in her family relationship that makes her recommend VRS to other. “One has to stop somewhere. One must give the younger generation the chance that they deserve.” She had worked in the service sector for 25 years.

Respondents who stated that they would not recommend VRS to other employees, are also quoted.

– Suresh M, an employee of Hindustan Ciba-Geigy, was around 45 years of age, and had worked for 15 years in the application testing laboratory, plastic division of Hindustan Ciba Geigy after his postgraduation in science. He said “VRS only benefits people who have a market value; those without adequate educational qualification or skills should definitely not accept VRS. This is because the returns remain fixed. If no additional support is possible, persons with family liabilities will find themselves in deep trouble”. The closure of my unit has left a painful phase in my life, hardly to be forgotten. After putting in 15 years of active service, making so many friends, with excellent working conditions, the deep-rooted images are difficult to forget. The clear proof is occasional dreams of reopening the unit (even after so many years of closure).

– “After having worked for so many years you get used to a busy life and an active life. Adjustment to a life after VRS thus becomes difficult.” said another respondent.

– One of the respondents wrote in the space provided in the questionnaire, “If one is below 55 years of age, you should not accept VRS at all. It is extremely difficult to get another job, again it is very difficult to adjust to a new life- style; the cost of living has gone up and there is an increase in expenditure; the amount received is inadequate.”

– Another respondent wrote “It is extremely difficult to get another job as you are now in a higher age group, and you have to work that much harder to get a job and achieve success” and again if VRS workers do get jobs, then only low paid jobs are available.

– A male employee, graduate ,aged around 55 years working in the Information Technology department of a pharmaceutical company was one of those who found himself on the VRS list of his company. This pharmaceutical company, is still working. He believes that it was the high input costs of the firm which led to its partial closure. He believes that VRS has been offered to make the organisation more profitable and to share the profit with the employee. Secondly, it offered to utilise local (Mumbai) lands at high costs to ensure future profits. Thirdly, VRS offered to subcontract technology at cheaper Indian skills, to encash on an International brand name. This VRS recipient has since found reemployment, and he believes that his working conditions/salary in the present job are the same as in his previous job. However, on further enquiry it was learnt that he still meets with other VRS employees, regularly and shares in their experiences.

Thus, the perception of the employee is that the purpose of VRS is to help the employer and to ensure that he makes maximum profits. This view seems to be similar and shared by trade unionists who I spoke to say ‘VRS is merely the end result of actions of reorganisation of the business undertaken by the employer’.

A few respondents stated VRS “leads to a loss of identity and status in society”. Work gives an individual both a social identity and status in society. Retirement from work thus severely limits continued participation in the utilitarian activities, thereby depriving workers of a social identity. Retirement makes an individual suffer a role-loss and the loss of status too of this non-earning member. This transition from active working life into retirement is often associated with a sense of loss and alienation. Retirement creates social, economic and psychological problems for individuals and quite often for households. It signals a major transition even for those able to treat their new-found free time as an opportunity.

A male employee of a large Indian firm, which merged with a multinational, had worked for 16-20 years in the firm. He stated that he was shocked when his firm shut down completely said that, “VRS is very bad, it is difficult to get a job when one is above 55 years of age”. He would never recommend accepting the VRS to other employees. He believes that it was mismanagement which was the single most important reason, as understood by him, which was responsible for the closure of his firm. His trade union made all efforts to save the firm from closure. They even moved the Supreme Court but their efforts were in vain. He seems bitter for having almost been forced to take VRS, but what seems to embarrass him is that his neighbours are curious to know the reason for his accepting VRS. He still meets other VRS employees and spends his leisure time looking after family affairs. He has not been able to find re-employment.

A male, aged between 30-39 years working in a factory at Bhandup (Johnson and Johnson), in the maintenance department, found that his firm had partially closed and he was, by the force of circumstances, made to opt for the VRS. He had risen from a semi-skilled worker to a skilled worker and had completed between 11-15 years of service. He was also the only working member in his family. When he first came to know about the closure of his unit he was uncertain. It was the moral support of his friends and colleagues of his firm which helped him during this difficult period. The blow of being terminated was softened for he received a rather large amount as compensation, his total severance package was Rs 7,40,000 which he has invested wisely. He is since re-employed. He says he would recommend VRS to other workers “only if they have got any opportunities, then VRS would be helpful to them.” However, he has a word of caution for VRS recipients “Don’t accept if you are indebted, you have bad vibes, don’t have some mental set-up and don’t have proper family support.”

An employee of a textile mill under the National Textile Corporation worked in the personnel department of his mill for more than 30 years. At the time of the partial closure of the mill, his total salary was only about Rs 4,000 and his take home salary was Rs 2,500. He received Rs 3 lakh as terminal benefits. He believes that it was financial difficulties which led to the partial closure of his mill by the employer. Neither the management nor the union tried and saved the mill from closure. He seemed very unhappy about being selected to be given voluntary retirement and had the following to say: (1) “The financial condition of textile workers is very poor. Day by day the consumer prices are increasing. Funds got under VRS are not sufficient”. (2) “The posts are reduced and textile mills will be closed in near future. Most of the textile workers are from the villages. Children of textile workers will have to face unemployment”. (3) “The government had not considered the future of textile workers whose lives were being destroyed due to closure of mills, by paying compensation under VRS”.

A large number of VRS workers studied are still unemployed, and quite a number of them are searching for a job. Many of them believe that employees are reluctant to hire VRS workers and that, it was because of their higher age, that they were still jobless.

It is also important to analyse some of the reasons why a large number of VRS recipients covered in my qualitative and quantitative study did not seek re-employment. The following trends have emerged:

(i) A sizeable portion of the VRS recipients were not seeking re-employment immediately especially in the case of women employees. The men on the other hand were clearly disillusioned. They were being forced to work in smaller firms, often in the informal sector on much lower salaries and this seemed to be an assault on their self-respect and dignity.

(ii) Again, most of them did not show any inclination towards self-employment and retraining.

Although some of the individuals did not want to avail of the sum of Rs 3,000 for rehabilitation, they were not strongly inclined and were actually reluctant to use the skill thereby obtained for self-employment. Here the main constraint is their lack of managerial skill, and lack of infrastructure facilities. They seem to lack both the ability and the will for self-employment. How does one then explain that almost all of them had studied, were married and had family responsibilities. Were they shirking their family responsibilities? This was definitely not so as they all seemed visibly concerned about the future of their children.

Yet they did not seek to be retrained. In a large number of cases, we informed some of the VRS recipients about the availability of a small amount of money for rehabilitation. On our subsequent meetings with them they had still not made even an initial attempt to get the money. This is perhaps due to the fact that most of them were experiencing a feeling of doom, helplessness and above all powerlessness.

Retrenchment of excess/obsolete workers on efficiency considerations; due to industrial sickness, non-viability of firms, closure of big and small-sector firms, is going to cost millions of redundancies in jobs. Is Indian society going to watch with indifference the feeling of doom, helplessness and above all powerlessness experienced by the worker.

Two questions thus need to be addressed: First, why does an individual feel powerless? Second, what could be the end-result of all this?

The worker feels ‘powerless’ as he has no part to play in an important decision which affects his life. Who decides who is redundant in a firm, who is to be slashed down. Is it the management or trade union or the worker himself? This is a major decision, affecting their life and the workers view this major decision process, as being outside their jurisdiction.

Normally, a worker per se may not be concerned with decision-making, unless these decisions directly affect their day to day working or their short-term/long-term benefits. Again when the decisions of management are perceived to be detrimental to the immediate material interests of the workers, they solicit intervention of their labour unions to negotiate. Thus, whether it is management which usurps decision-making or the union-leader, the net result for the worker is the same powerlessness.

What we have observed throughout our study, is that the worker who takes VRS realises that:

(a) people at higher levels in the enterprise are insensitive to the serious economic and social costs of his sacrifice, for his family and the larger community; and (b) A worker is pained and anguished to see that others who have a stake in the enterprise such as shareholders and managers, are not called upon to make sacrifices in the larger interest of the enterprise or society. And this, although often industrial sickness and inefficiency is primarily a function of managerial incompetence or financial malpractices at the top level of management. This is an assault on the self-respect and dignity of a worker.

Workers should be educated about VRS, say the union activists whom we spoke to. They should become aware of risks due to the loss of their livelihood and jobs and the grave conditions that their families would then face.

Workers must be taught how the money value of the VRS amount will erode over the years. What is increasingly being done by a large number of unions is that they are furnishing each worker with a statement of his current wage and what he would earn till retirement, which the worker was asked to compare, with what he would lose if he took VRS. Workers are also reminded that work is a social activity and that they would be bereft of a sense of fulfilment and support from their colleagues at work.

Unions interviewed pointed out that they do not advocate a blind opposition to VRS. But “it must also be seen whether the management, staff and directors are also sacrificing in terms of their salary and perquisites, when they call upon one section of workers to sacrifice their livelihood for the viability of the company. A worker should opt for VRS if he has a high skill and has an equivalent job in hand; or if a worker is ill and cannot, because of his illness or sickness, continue to work.

In a large number of cases that we studied, we observed that the worker is retrenched when he is advanced in age. At this age his energies are declining and it becomes difficult for him to compete in the employment market to secure another job. VRS compensation may be of some assistance but he may have to tide over his hardships over a span of several years.

The plight of these VRS recipients (or as trade unionists call them retrenched workers) has to be considered in the light of the prevailing conditions of unemployment and underemployment in the country. Abysmal poverty has been the bane of Indian society and the root cause is large- scale unemployment and underemployment. Thus, VRS is no different from retrenchment. Only the affected worker experiences poverty a little later and gets a larger compensation. Otherwise in most respects, it is the same. Both have similar consequences on the workmen and need to be dealt with seriously.

Since the costs of adjustment through VRS are so high and has often led to the pauperisation of workers for no fault of their own, one needs to ask several questions: If VRS is avoidable and is there an alternative to VRS? Is there is any other type of rationalisation which would be both profitable for the company and would help protect workers? Are there really compelling reasons for imposing retrenchment through VRS?

In fact it became very clear through the study that many companies had not made an application to the authorities and sought the permission of the authorities under section 10(10c) of the Income Tax Act for introducing a VRS. Our study brought out very clearly that:

– many VRS recipients were unaware of the facilities provided by the government through the NRF and some of them on receiving their VRS amounts had left for the rural areas, their native homeland.

– Retraining was not perceived as a skill improvement strategy for redeployment. VRS recipients did not value retraining.

– Most of the VRS workers are in the age-group 50 plus. So they are to be the beneficiaries of retraining. Society and thus those who make the rules pertaining to retraining have their own pre-conceived notions of this age-group.

The general belief is that it is not worth one’s while investing in this group as they have very few more years when they are active in the labour market;they would be less able to cope with technological change;they are hardly motivated to seek retraining and thus redeployment. It is for this reason that those in the age-group 55 and above are considered ineligible for training. Very often, the older workers themselves have the above-mentioned perceptions of themselves. But this notion can be erased by counselling. As stated earlier, this is hardly being done and a lot of meaningful experience, talent, often valuable skills of the older workers is being wasted. Older workers who were experienced in a particular trade also seemed reluctant and resistant to the idea of receiving training in another trade. The reasons seemed to be (a) their age, (b) their low level of education.

Most of the VRS recipients were embarrassed when they were selected/coerced/or opted to take VRS. This embarrassment arose because they found it difficult to explain to their families, their relatives and their often curious neighbours why they were selected to be offered the VRS. For example, Suresh P 58 years old had worked for 23 years as an assistant engineer in RCF. It was his ill health which compelled him to opt for VRS when the scheme was offered by his company. He received a princely sum of Rs 13.5 lakhs, which he wisely invested. He seemed content with his wise decision. Two years later, when we met Suresh he had a complaint.His wife did not like to see him at home everyday. What would she tell her friends and neighbours? Suresh was searching for suitable employment merely to keep himself occupied not for the economic rewards. His wife, like most other members of our society, believes, that the position that one’s family occupies in society depends to a great extent on the occupation of the husband and on how successful he is in that occupation. Thus, the consequences of the loss of a job for a worker and his family should be treated as a problem, which should concern all of society.

[This study is based on a part of the author’s doctoral dissertation. The author wishes to thank Sharit K Bhowmik and S H Naik for

their help and guidance.]

To read the full text Login

Get instant access

New 3 Month Subscription
to Digital Archives at

₹826for India

$50for overseas users

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top