Tata Motors is the third biggie after BSNL and MTNL to dole out voluntary retirement package

• Auto major Tata Motors is considering rolling out a voluntary retirement scheme (VRS) for its employees across commercial and passenger vehicle businesses.
  
• The package will be available to 1,600 permanent employees — especially those from engineering operations.
  
• The automobile giant is aiming to reduce its employee cost — which rose to 10.7% of its net sales for the second quarter.

Homegrown auto major Tata Motors is considering rolling out a voluntary retirement scheme (VRS) for its employees across commercial and passenger vehicle businesses — thanks to the sluggish growth and falling sales.

The package will be available for over 1,600 permanent employees in its fold — especially from engineering operations. “This year, Tata Motors’ employee cost-cutting plans are more aggressive than the previous times. The company is now seeking voluntary retirements from more than 1,600 people across all locations and hierarchies," Mint reports.

Tata Motors’ engineering employee count is also much higher than the industry average, and this move might rationalise it to improve efficiency.

The automobile giant is aiming to reduce its employee cost for quite some time now. It had introduced a similar employee package in 2017 as well. Its employee cost rose to 10.7% of its net sales for the second quarter which almost doubled from . 5.9% last year.

Job losses have become common in the automobile industry. The homegrown auto major suspended production, leading to plant shutdowns in Pune and Jamshedpur for a few days. It slashed passenger vehicle production by 63% during the same time, while the overall sales declined by over 40%. In all, over 400,000 permanent and temporary auto workers lost jobs in the last six months.

During the quarter ending September, Tata Motors’ net sales also fell by 44% — registering a net loss of ₹1,281 crore.

Yet another group company Tata Steel also announced its plans to cut nearly 3,000 jobs across Europe. And it is a domino effect of global slowdown in auto sales which led to a 14% fall in steel prices.

Not just Tata Motors

Voluntary retirement in India is not a group or sector-specific trend either. Debt-laden companies — MTNL and BSNL — announced its VRS package for its employees aged above 50 years. The government will infused a total of ₹29,900 crore for settlements and retirement liabilities of these state-owned telcos.

In 2018, Cognizant too introduced a ‘voluntary separation programme’ for senior executives. Under this, it offered 12-month salary and stock benefits depending on the employee’s tenure in the organisation.

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