The Finance Ministry has approved a 12 per cent salary hike with five years arrears for the public sector general insurance industry. Finance Minister Nirmala Sitharaman, who had earlier refused to give her final approval to the wage hike proposal unless unions of the PSU insurance companies agree for the “performance linked future wage revision” had changed her mind to approve the proposal, sources said.
The FM’s approval has reached the Department of Financial Services (DFS) for its necessary notification and implementation, industry sources said. PSU general insurance firms have also come out with the new salary structure for various categories of employees after the wage revision.
The government had earlier rejected the demand of unions for a pay parity with Life insurance Corporation (LIC) and ECGC.
However, industry observers have now raised questions about the ability of the three loss making companies (Oriental Insurance Company, United Insurance Company, and National Insurance Company) to bear the burden of higher salaries and arrears of their employees unless the government infuses more funds into these companies. With the 12 per cent hike along with five years of arrears, wage bill for NIC will be around Rs 2,177 crore, Rs 2,080 crore for New India Assurance (NIA), Rs 2,135 crore for OIC and Rs 1,752 crore for UII. There will be a total outgo of Rs 8,146 crore from all four companies for meeting wage revision expenses, analysts said. Analysts said the industry will see a large number of employees, particularly above 50, availing VRS (voluntary Retirement Scheme) after receiving their revised salaries.
The government last year had approved a 16 per cent wage revision with arrears for the employees of IPO-bound LIC and had even finalised a hike of 15 per cent with arrears for the PSU banking industry in 2020.
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