Khurram -Picture Courtesy of Dawn News
OVER the course of the PIA workers’ strike, many things have been said that need to be corrected. And the biggest misconception that needs to be corrected is that one that says the workers are the cause of the airline’s problems. They’re not.
The airline’s ratio of workers’ compensation to revenues has been constant, between 10-13pc since at least 2003. The ratio doesn’t change around 2008 and 2009, when reportedly the airline was stuffed with political appointees.
Employee costs are not the biggest problem at PIA and workers are being unfairly blamed, in the airline as well as across the public sector, as the root cause of the difficulties. No doubt there are rackets operating within the airline, and the union bosses have thrown their weight around in places where they had no business, but these practices by themselves would not sink the airline into the position that it is in currently.
Two separate people, in a position to know the company’s financial position have told me the same thing. One is Shabbar Zaidi, whose firm is one of the two auditors for PIA. According to him, “PIA’s problems are not the employee costs. The airline suffers from a lack of revenue.”
The other person preferred to speak without attribution, but since he has served as a CFO in the past, he knows the financials quite well. “Employee costs are not the big problem in PIA,” he confirmed, but added that a rigid and inflexible attitude by the unions to any adjustments, as well as the numerous rackets that the workers are involved in were a pain to deal with.
Another myth doing the rounds is that the airline has seen too many people inducted only on political grounds. As evidence, people point towards the induction of a large number of employees by the former PPP government during its early years, and the numbers given range from 4,000 to 9,000. If this is true, how come the total number of employees in the airline stays constant over this time, and only declines in the years subsequently?
Employee costs are not the biggest problem at PIA and workers are being unfairly blamed.
The truth is that 3,500 contract workers, who were already on the payroll of PIA, were regularised in the employment in that year. These were not fresh inductions, nor did they increase the burden of the payroll. But the regularisations were turned into a propaganda tool with which to beat up the PPP government, and has gone into the mythology that animates our politics as one of the core reasons why the airline is in the shape that it is in today.
So if the workers are not the problem, what is? Here’s one take.
PIA has suffered from the same central problem that the rest of the public sector has. Over the years the government became increasingly unable to mobilise the resources that were required to invest in the airline for fleet upgradation and modernisation. This inability to raise the investments required to keep the airline running is the core reason why revenues started plunging.
As revenues started to plunge, successive managements were left with no choice but to search for other ways to keep the airline functioning. One obvious way was to borrow. Another was to sell its assets. A third was to cut costs. As the revenues plunged more seriously, each of these strategies was invoked more and more furiously.
The inability of the government to mobilise investments on the scale required to operate a world class international airline had a crippling effect on the airline’s finances. It put the company on a high-cost path that involved renting newer planes instead. Once on a high-cost path, PIA managements had little option but to look to sell assets and cut costs. The assets that were sold first were routes and landing rights to other airlines without pressing for reciprocal rights. Eventually, it came down to having to sell hard assets, like the Roosevelt Hotel, but then politics kicked in.
It was when the cost-cutting axe began to fall on the workers that the present manifestation of the problem appeared. Management told its part of the story, saying the workers were becoming an unbearable burden. Anecdotes were shared about the way in which they behaved, and a narrative was built that cast the workers as the core of the problem.
The workers responded by banding together tightly, and electing the most combative amongst them to positions of union leadership, in a bid to stave off what they perceived as an unfair offloading of the costs on them. They mobilised anecdotes and narratives of their own, of management corruption in the sale of assets and rental of aircraft, of the exorbitant salaries that were being paid at the top while those at the bottom were lectured about the need to tighten their belts.
Political parties used this tension to their advantage, coming in on the workers’ side when they were in opposition, and abandoning them once they came into power. All through it, revenues continued plunging, and more and more aircraft had to be grounded. The size of the fleet shrank, giving rise to the most quoted and misleading number that has come out of this sordid tale: the employees to aircraft ratio.
This ratio, we are told, is the highest in PIA. That may be true. But it is high not because too many workers have been hired. It is high because the number of aircraft the airline is able to operate on current revenues has fallen. Therefore, in order to rectify this ratio, what is needed is to find a way to rebuild the fleet, not slash the payroll.
Workers are being vilified across the public sector, while their treatment in the private sector is abysmal. This is wrong at a very fundamental human level; it will not solve any of the problems plaguing the airline or any other public-sector company.
khurram.husain@gmail.com
Twitter: @khurramhusain
Published in Dawn, February 11th, 2016
