Deloitte’s Railway Restructuring Report to be ready by March 2016

Deloitte’s Railway Restructuring Report to be ready by March 2016

The country’s largest civilian employer wants to reduce its wage bill. But can the Railways convince its men? As it expands its network and reach, particularly when large scale projects are taking shape under JV/SPV/PPP models, apart from High Speed Rail lines, Indian Railways needs more manpower to maintain its tracks and for smooth operations. But the practise of matching creation of posts by surrenders, is a hassle.

New Delhi: When Railway Minister Suresh Prabhu tweeted on September 24, that the Indian Railways (IR) has mandated consulting firm Deloitte to formulate a manpower policy for its gazetted officers, it left the officer-community of the public sector behemoth, confused.

It was probably the first time that the IR was roping in a consultant to take a re-look at the line-up of its officer cadre. The IR is India’s second largest employer, after the Indian Army, with a total headcount of 13.34 lakh, and a wage bill of ₹76,242 crore in 2014. Of the total headcount, 17,100 are officers, including 2,597 doctors.

The ‘railway-men’, excluding the paramedical and security personnel, total 12.2 lakh. Manpower costs, including pension payouts, constitute over 50 per cent of the IR’s cost (wages and allowances make up for about 33 per cent, and pension about 17 per cent).

Deloitte has to study the functioning and the role of the departments at the zonal and divisional levels. By evaluating the scope of outsourcing and technological up gradation, the consulting firm will suggest a more rationalised manpower of officers that will be required to run the Railways. This will determine the future recruitment of officers. Deloitte is expected to submit the report by March 31, 2016.

Officer community

The officer community is perplexed because the IR is already conducting studies, called work study, on how many posts in the organisation can be ‘surrendered’ – the organisational speak for rationalising manpower. In the last 10 years, the IR has recommended surrender of 1,35,485 posts, of which 94, 203 were actually surrendered. Where did the remaining posts go?

Data from the organisation show that for the fiscal year 2015, 14,420 posts were recommended for surrender. Of this, only 9,038 were surrendered, and the rest of the posts that were proposed, were not agreed to. Till now, 8,927 posts are pending surrender. Indian Railways did not reply to a query on why its zones have either not agreed to surrender, or are delaying it. The organisation didn’t reply to a query on the number of officers posts that the IR was planning to surrender.

A work study gives a recommendation on the number of positions that can be surrendered after analysing a particular activity conducted within the IR. Apart from studying the productivity and time taken to complete the task, the work study suggests ways, including technological upgradation, to make it more efficient. For instance, using a loop line to eliminate the reversal (change of direction) of a train helps save time, money and manpower. The study identifies posts that can be done away with. Usually, the employee is either promoted (to do away with the post) or deployed in another department with appropriate training. Sometimes, the organisation waits till the employee retires, and then makes the position redundant.

“The problem is that such work studies are not done scientifically and are conducted by untrained people who have a single point agenda – ensuring surrender of posts,” says a Divisional Railway Manager (DRM ) requesting anonymity. Most of the IR employees requested that their identities not be disclosed as the issue was sensitive.

Adds the DRM, “I was asked to surrender ticket counters based on IRCTC bookings. Why are departments arm-twisted to fall in line?” Trade unions are worried about the job security of lower-ranked employees. “They (those who conduct the study) never discuss surrendering of posts with us. The parameters used for surrendering posts are totally unilateral and totally against safety,” says Venu P Nair, Vice-President, All India Railwaymen’s Federation. A senior office bearer of the rival union, National Federation of Indian Railwaymen, says: “Work study is based on assumptions, and not practicality. IR’s policy related to the surrender of workmen’s posts should be reviewed.”

Departmental rivalry

But why are the officers, who consist of less than two per cent of the IR’s workforce, being rationalised first? The DRM says: “The Minister probably did it as a compromise. First reduce the number of officers, and then lower the staff strength down the organisation; otherwise, the unions will be up in arms. There is about three per cent retirement every year in IR. Of this one per cent is filled up, and two per cent is natural attrition. You have to take unions on board.”

Over the years, the IR has been able to reduce workforce from 18 lakh to 13 lakh. But to reduce it further to 11 lakhs, mechanisation is needed, says S.K.Sood, General Manager, Central Railway, in a recent interaction. “That will be possible only if we raise fares, and more money is spent on material and machines. With just 7 paise of every rupee earned by the IR available for doing maintenance, and procuring materials/machines, it is not feasible.” There is also a shift towards induction of skilled manpower. The latest year book of IR says that the ratio of supervisors to workers changed from 25:75 in 1950-51, to 90:10 in 2013-14.

Complicating things is the practise of matching a creation of a new post by the surrender of another. Usually, creation of a new post is based on a half-yearly requirement sent by each department. The requirement is scrutinised and put up at the AGM for approval. The unions are opposed to the practice. Nair says, “One per cent reduction in workforce every year was one of the mandates of the 6th Pay Commission. As on date, there are two lakh vacancies. Our opposition (to surrendering) is due to safety issue.”

Adds a Chief Engineer from the Electrical department: “Departments are unable to find posts to surrender whenever new assets are created. Due to the electrification across the country, new electric engine sheds have come up. We need to recruit more maintenance staff but that can be done only by surrendering existing posts. Where are the posts to surrender when we are creating a new asset?”

Moreover, there should be a simultaneous reduction in mechanical staff from the loco department (which looks after diesel engines) as electrification increases. “This does not happen due to departmental rivalry. The mechanical department refuses to let go of its employees and this is one of the reasons why surrender of posts is not agreed to by zones,” he adds. With the Bibek Debroy Committee, on the proposed restructuring of the IR, observing that a high degree of ‘departmentalism’ affected the work culture of IR, there is an urgent need to rationalise the manpower.

IR officials add that departments often display the behaviour which symbolises the proverb ‘might is right.’ Advancement in technology has ensured that operations in a railway station can be controlled by a single route relay interlocking cabin. “However, the traffic department continues to resist it, scared of losing its manpower, and in turn, its might. In a small station, for instance, controls are at three places- two cabins and a station – working 24X7. Six people were required for any shift, adding up to 24 people each day,” says a senior official from the Signal & Telecom Department.

When this operation is centralised, cabins become redundant and the requirement of manpower reduces to four. This reduces the salary bill, as only two maintenance staff are required. However, that did not happen as the Operations Department did not surrender these people. “For them, the well-being of their department is more important than the organisation. This tendency is prevalent right from the grassroots to the Railway Board,” he adds.

A paradox

Despite the need to rationalise its manpower, the IR is also facing a shortage of personnel. Says the S&T official: “There is a massive shortage of maintenance staff for signalling assets and the staff increase is not commensurate with the requirement. Frequent signal failures are due to the lack of maintenance.” The problem amplified in the last decade, with the addition of seven new zones to the existing nine. “The number of people who opted to go to the newer zones was low. For instance, the traffic accounts at Garden Reach, South Eastern Railway (SER) was trifurcated into SER/SECR(South East Central)/ECoR (East Coast Railway),” says the senior official from the zonal accounts department. “Newer zones have 100-120 people in their traffic accounts department, whereas the same department in older zones are about three times larger.

Poor financial health

Indian Railways has seen costs spiralling due to various factors such as implementation of two pay commission reports, creation of seven new zones, capacity utilisation of over 100 per cent in its trunk routes – the golden quadrilateral and its diagonals; and lack of focussed capital expenditure. In addition, there was no hike in the fare for nearly a decade even though oil prices hit all-time highs. And to add to the woes, the IR lost freight customers to other modes of transport.

“Increase in zones has led to project spill-over from one zone to another, and eventually led to conflicts,” says an officer from the Operations Department. IR is pursuing various technology initiatives through its arm, Centre for Railway information Systems, as part of an endeavour to speed up processes, reduce costs and improve service delivery. The new technologies include systems to manage freight operations information, human resources, and ticketing and reservation. Moreover, practices such as cash collection from stations, which is now outsourced to banks, are now a passé, thus unlocking manpower. Process improvements such as avoiding reversing, wherever needed, are also being implemented.

For instance, IR recently announced a change in the route of the 145-year-old Howrah-Mumbai Mail. From April, the train will no longer go via Allahabad, and will instead use the nearby Chheoki bypass. This will translate into a saving of one hour as touching Allahabad means reversing direction and change of engine. The loco change is now likely to be done at Mughalsarai, where the train asit is halts for 15 minutes.

Possible solutions

So what is the solution to the huge manpower hurdle faced by IR? The basic flaw starts at the top, says Nair. “Inter-departmental conflicts are the creation of higher ups. What are they doing? If they want they can resolve the conflict.”

Some ask for the redeployment of people from areas of surplus to those of scarcity. “If ticket-booking clerks are in excess, they can be redeployed as ticket checkers,” says an officer from the Commercial Department. “Excess people are a drag on the financials, especially when you have the Seventh Pay Commission coming up,” says the DRM. “A lot of staff is used for maintenance because of poor quality of material and spares. IR has to decide whether it wants to create mechanics or a factory, which provides high-end employment in manufacturing. For example, there is a railway workshop in Mumbai’s Lower Parel, which is on one of the most expensive real estate in the metro. Automation will ensure five times the existing output. Just tell the staff nobody will be sacked and get more output by making them work smarter with better machinery with better technology.”

But the unions say mindless automation could compromise safety. “First do technology upgradation and then find out redundant manpower then redeploy. There should be no technology enhancement without method review. They are not deploying additional manpower in sections where the number of tracks increased, for instance the same staff maintain the extra two tracks between Kalyan and Kurla in Mumbai Division,” says Nair. “There are chances of revenue leakage if suburban train ticketing is outsourced to individuals,” adds the NFIR Union official.

A recent report by Morgan Stanley on Indian Railways identified a key risk in employee costs that will strain internal generation of cash. With wages at 55 per cent of traffic receipts, internal generation is likely to be constrained, it said.

For some, a review of the organisational structure is an imperative. “A thorough examination of whether a three-tier structure of Board, Zone, and Division is required.This has to be properly assessed as it has ramifications for the whole of India. Organisation structure should be made leaner; as on date there are at least 13 levels in the hierarchy between the bottom and the top in any department,” says the officer from the Operations Department.

The recruitment system could come for a revision. At present the recruitment for officers in IR is departmentalised, and there is no fungibility of personnel between departments. A mechanical engineer remains in the Mechanical Department through his career. Similarly, a mechanical engineer recruited through the civil services examination for the accounts or personnel department, remains there. Even if there is a need, one can’t be substituted for the other.

At present, the recruitment in several departments is done through the engineering and civil services examinations conducted by the Union Public Service Commission. The Debroy Committee instead suggested two options for recruitment. One was a unified Railways Service examination.

And the other was to merge the engineering services under the Indian Railways Technical Service, and non-engineeringservices as Indian Railways Logistics Service. This would involve job rotation and an objective, performance assessment system. This may help rationalise the workforce.

Amidst all the undercurrents, it remains to be seen what Deloitte comes up with in March. (Courtesy: K Raghavendra Rao, Business Line)