Air India set to implement new pay scale from March 1

The massive restructuring exercise — in line with recommendations of Justice Dharmadhikari committee — will see the airline’s staff costs go up by around Rs 200 crore annually nullifying the savings on staff costs from the retirement of around 3,000 employees over the past two years.

The wage bill for the airline is scheduled to increase to Rs 3,400 crore for the financial year ending March, 2015 compared to Rs 3,200 crore registered the previous fiscal.

A senior Air India executive told The Indian Express, “The revised pay scales for 17,000 employees will be effective from March 1, 2015. If we had not put in place pay-cuts from January 2013, our wage bill would have gone up by 30 per cent. Now despite the increase in basic pay as per recommendations of the Dharmadhikari Committee, staff costs will go up by 10-15 per cent.”

Air India had introduced a new salary structure from January 2013, which entailed a pay-cut of up to 15 per cent for licensed category employees. The new pay structure also did not include the productivity-linked incentive (PLI).

The pay scheme being implemented now will restore a similar quantum which was deducted because of these cuts.

As of March, 2013 Air India had 25,000 employees. The airline estimates its personnel to reduce by about 4,600 through normal retirement by March 2016, translating to Rs 300 crore of annual savings in staff costs.

“Our natural attrition rate is quite high which would have translated into a substantial reduction in wage bill. However, staff costs will now remain at the level of Rs 3400 crore or go up to Rs 3500 crore because of the implementation of the new pay structure from March onwards,” added the executive.

In January 2012, the Dharmadhikari Committee had recommended measures to integrate 27,000 employees of erstwhile Air India and Indian Airlines such that the services and the manpower in the merged entity can be utilised for the optimum benefit of the company.
The recommendations intended to bring parity in career progression, pay structures and harmonise the working hours for all employees by aligning them with Department of Public Enterprise (DPE) guidelines for executive cadre and with industry norms for non-executive cadre.

In line with these recommendations. Air India has already given proforma promotions to around 10,000 employees over the last one year (these had been held up since the Dharmadhikari Committee was constitued in 2011).