SBI VRS scheme penny-wise and pound-foolish: AIBEA official

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General Secretary of the All India Bank Employees’ Association (AIBEA) C. H. Venkatchallam on September 8,2020, heavily criticised the State Bank of India’s (SBI) plan to remove 30,000 of its middle-aged employees under a voluntary retirement scheme.

The SBI had recently proposed a ‘Second Innings Tap Voluntary Retirement Scheme (VRS) under which those who have completed 25 years of work or completed 55 years of age will have an ‘option’ to make a respectable exit route along with gratuity benefits, pension, provident and medical benefits. As per PTI reports, the scheme will affect 30,190 employees and save the bank over Rs. 2 crores.

However, Venkatchellam said that the policy is in bad faith because it did not look into the interest of the employee that had spent many years of service at the bank. Regarding the government bank’s argument that the scheme would help save money, he called it a ‘penny wise pound foolish’ approach.

“Employees of 55 years of age are currently among the productive people of society. Once these people are made to retire, they will become a liability to society. They will only be able to consume and not be a part of the production process,” he said.

Incidentally, these retirements will add to the ever-growing unemployment rate of the country which has reached a little over 9 percent in urban areas – known to have more of such jobs – as shown by the Centre for Monitoring Indian Economy (CMIE) data of September 2020.

According to CEO of Centre for Monitoring Indian Economy Mahesh Vyas in his article ’21 million jobs lost,’ salaried jobs have taken the worst hit during the Covid-19 crisis. These jobs have the singular quality of not growing with the country’s economy but suffering the most during an economic meltdown.

Tracking the so-to-say progress of salaried jobs, he pointed out that salaried jobs grew from 21.2 percent in 2016-17 to 21.3 percent in 2019-20 despite corresponding economic growth.

Out of the 86 million salaried jobs estimated during the beginning of 2019-20, nearly 21 million jobs were lost by the month of August with 3.3 million job losses in August and 4.8 million job losses in July. As a general rule, salaried jobs are preferred by the populace due to its job security and regular wage frequency.

As mentioned by Vyas in his other article ‘Salaried job losses,’ households with salaried jobs are better placed to build savings and improve their standard of living. Such households are also better placed to borrow and service their borrowing because of the steady nature of their earnings.

Yet, employment currently seems to be growing in the private sector i.e., employment by entrepreneurship. However, Vyas pointed out that entrepreneurship is generally seen as an attempt, taken up only when all other avenues of employment lead to a dead end. He said that entrepreneurship had declined at the beginning of the lockdown but increased exponentially by August 2020.

Moreover, previous month’s CMIE reports show that while salaried jobs continue to suffer, informal jobs returned and even increased after the lockdown. Non-salaried employment has increased from 317.6 million last year to 325.6 million in July.

This means that by August, nearly 8 million jobs were taken up in the informal sector. Meanwhile, salaried jobs declined by 18.9 million or 22 percent during the lockdown.