The Pakistan Steel Mills Dilemma | Pakistan Tehreek-e-Insaf


It’s April 2009. The month is coming to an end, it’s 29th of the month. My father, who is an officer at Pakistan Steel Mills, comes home with a long-face. My mother asks for an update on his April’s salary. He shakes his head in disappointment.

April is the first whole month me and my family spent without getting paid. Before that my father did get his salary by 15th of the month. Going back further in late 2008, he got salary by 5th of the month. And even before that, in Gen (retd) Musharraf’s regime he used to get his upcoming month’s salary 4 days in advance i.e by 26th of preceding month.

The reason I remember this all so vividly is because following April 2009, me and my family spent almost a whole decade of emotional and financial turmoil. A crisis which had nothing to do with our decision-making; a downfall that drained our family’s savings, be it the 3 insurance policies my dad took in each one of his daughters’ names or my mother’s jewelry and even my early adolescence. This financial crunch imposed by the then governments’ corruption and repudiation had led me to start working since I was barely 17, in order to support my university education and my family.

Just when Economic Coordination Committee approved on Wednesday a financial plan that paves way for closure of Pakistan Steel Mills while giving the rightful retirement funds to remaining 9350 employees of Steel Mills, a number of people had been asking me for my opinion on this.

Please bear in mind, the Pakistan Steel Mills, at one point in time, nurtured 17,000+ employees and their families. In 2020, employee headcount stood at 9,350. Out of those, for 8000 employees’ possible sacking, ECC had previously approved of a Rs. 18.74 bn package (in May 2020) which would cater for their gratuity, provident funds and other retirement funds’ reimbursements. For the remaining, 9350 employees, the costs for retrenchment (gratuity, provident funds and other retirement funds’ reimbursements) have been formulated as Rs. 19.657 bn, and this is what basically got a go-ahead from ECC on 3rd June 2020.

Final decision of whether to sack all employees of Steel mills or not remains with Federal Cabinet. The discussed ECC approval only means that in case Federal Cabinet does go ahead with the decision of sacking all employees of Steel Mills, the financial costs have all been worked out and all employees will be given their dues. Some media outlets have mistakenly or maybe on-purpose spun this news to be government’s decision of sacking Steel Mills employees as if they will be rendered jobless without any dues or perhaps with only Rs. 23 lacs (that was quoted as average amount) which is misleading. My own father has been getting calls from his colleagues who are probably worried or confused.

It’s also important to note that all employees of Pakistan Steel Mills have been on paid leaves since March 2020 due to COVID-19 situation. Before all the Corona situation, Pakistan Steel Mills had reduced work week to 4 days, giving a forced leave on Fridays to all employees in a bid to cut down transportation costs because Steel Mill provides bus service to & from employees’ home/Steel Mills. This move came after the incident of abrupt closure of Steel Mills buses in PMLN’s government against which the employees protested under the leadership of PTI’s labor wing leader Yasin Jamro. It was a really tough week; I recall my father changing 3–4 buses in order to reach PSM and then same ordeal while coming back home. He was lucky because we lived in Model Colony near the airport back then which is relatively near to PSM complex. Those who lived in further parts of the city had it even worse.

The mighty Pakistan Steel Mills complex that gave Rs. 9.54 billion profit till 2007 and then went into record loss within an year in 2008.

The mighty Pakistan Steel Mills complex that gave Rs. 9.54 billion profit till 2007 and then went into record loss within a year in 2008.

How did it get so miserable?

Long story short, what was once a mighty steel generating complex under the leadership of Gen (retd) Abdul Qayoom that gave a record Rs. 5 billion profit to national exchequer in 2004 when he took charge and that gave Rs. 9.54 billion profit in 2007, almost an year after his exit as Chairman, went into a downward spiral ever since. I still remember how things were more than satisfactory for us before that. Every summer, my dad would get an increment, we had medical allowance, things were pretty great. Come 2008, and things went haywire. Till date, my dad’s promotion from Junior Officer to Assistant Manager and subsequent salary increment as approved in PPP govt’s Budget 2008 has not been adjusted. Rumor had it that the then President Asif Zardari installed his crony as PSM Chairman and that’s when the downfall began. It is alleged that about Rs. 22 billion was embezzled from PSM accounts which threw the steel complex in perpetual losses from which it has not been able to recover till date.

And if PPP government’s corruption was not enough, it was succeeded by PMLN’s government; a party whose top leadership has steel industries both in Pakistan and abroad, referring to Ittefaq Foundry and Nawaz Sharif’s sons’ steel mills in Jeddah. Why would they even care about revival of State owned Pakistan Steel Mills when it’s a direct threat to their own business. The financial repudiation of PSM due to PMLN’s conflict of interest also added to our misery.

Just this year when my father got his May 2020’s salary even before Ramadan that started on 29th April, my mom recalled how it was the Eid of maybe 2016 or 2017 when my dad didn’t get a penny for 3 consecutive months and in last 10 days of Ramadan, Nawaz Sharif signed his approval on a package for PSM and left for spending time in Makkah. The package he approved gave barely Rs. 7000 to all employees…TWO days before Eid.

Now imagine, you go unpaid for 3 months straight while you show up at office every day, trying to maintain the remaining of whatever plants are running, fixing issues and all, Eid is right around the corner and what do you get? Rs. 7000. Only.

Yes, amidst all this, some PSM employees started working somewhere else part-time by taking their rightful leaves. Some scrapped off spare parts no longer in use and sold them to earn some extra-bucks.

One PSM employee as my father told me, after Asr namaz in PSM mosque asked his colleagues for financial assistance because he had no food at home for 2 days.

And you know what the biggest misery was?

The people he could manage to ask help from, whom he thought would empathize with him, his comrades who were in this with him, they also had very limited means to help their colleague. All the people could only manage Rs. 50 or Rs. 100 bills because they too had been unpaid for months. Such was the despair in Pakistan Steel Mills during PMLN regime.

And then came the repertoire of then ECC under PMLN government figuring out 4 options:

  1. Shut down entire PSM and give golden handshakes to employees
  2.  Liquidate 26% assets
  3.  Privatize whole PSM and see how many employees are retained or let go by buyer
  4.  Pay off 3 months pending salaries

For 5 years, PMLN kept treating cancer with a Panadol.

The “most experienced team” led by the finance expert Ishaq Dar, in 5 years could not decide on either of the 1st three options and always found the 4th option to be most economically feasible after every ECC meeting. Between ECC meetings, the Steel Mills employees would live a life of misery, hopelessness and an endless wait for a “decision” regarding their organization.

Who is responsible?

Ever since Pakistan Steel Mills’ issue got highlighted in media, I see people passing on slurs like “PSM employees are good for nothing, it’s just a burden on national exchequer”¸ “muft ka beth k khaate hain”, “why is tax payer’s money wasted on paying them salaries when they do nothing” and many other bitter remarks.

To all those who think like that, I want to ask you if it was a PSM employee’s fault that an organization where he gave on an average 30+ years of assiduous service that the organization got plundered by a corrupt government and went in a perpetual loss?

No person would want to work at an organization where he gets unpaid for 4 months and then receives 1 month’s or 2 month’s salary if very lucky or where he gets Rs. 7000, two days before Eid after 3 months of non-payment. The only thing these people wanted was their due provident fund money and gratuity. Because for the ones retiring or even if someone wanted to quit, those dues were also not being given to them. Many of my father’s fellows passed away on-service, their widows also did not get their dues until very recently under the PTI government. Several people retiring since 2014 have got their dues in 2019.

While my dad’s appointment was totally based on merit and I can conveniently blame the financial losses of PSM on the daily wagers who had been regularized by PPP government to bag some votes in employees’ union elections but that is also very unfair. Overstaffing of PSM is an issue for sure. But to call them political appointments and blaming them for bypassing merit is unfair. Those daily wagers were just doing their job. No one asked for their consent at that time. It was the decision makers in PPP government who regularized them without calculating the financial cost of that process on PSM. Embezzlement of funds from PSM accounts was also cherry on top. So, I want to ask all of you. Is it in any way fair to blame the current state of PSM on employees?

They didn’t ask the government to pay them for doing nothing. They were doing their jobs of keeping the plant running and producing steel until the financial mismanagement on 2008–2013 and then 2013–2018 governments compelled the plant towards closure. The people whom you blame for doing nothing are not sitting idle by choice but due to circumstances.

Then comes another aspect. The people at Steel Mill did try to do whatever they could. But then comes Mohammad Zubair as the Chairman of Privatization Commission. On one hand as I stated above, the ECC in PMLN era could not work upon a single proper plan for privatization of any SOEs especially PSM. But our Chairman Privatization Commission lived in his own bubble of fantasy. The first and foremost thing he did was putting a ban on Pakistan Steel Mill for selling any of the already manufactured steel because he was busy figuring out how to privatize this. The biggest disservice done to Steel Mill employees and State of Pakistan since this is a State Owned Enterprise.

The Steel mill that was already in shambles due to corruption in yesteryears, now faced another issue. All the steel lying in godowns of PSM could not be sold and since it is metal, it started rusting. One would think why Mohammad Zubair even did that. I think the answers can be found if we just try to dig what company’s steel is used in the so-called Mega Projects of Punjab; it’s mostly Ittefaq foundry’s steel used in those projects. While PSM was literally banned to sell whatever steel they had managed to produce despite limited number of plants operating. Would you blame the employees for this too?

PTI Government, PSM and ECC’s recent decision

Pakistan Steel Mills had found an empathetic friend in PTI’s Asad Umar. When Mohammad Zubair had banned Steel Mill’s steel from selling, I happened to meet Asad Umar at Insaf Professionals Forum event in 2017. I told him about the plight of PSM at the hands of his own brother. Asad Umar raised the issue in standing committees and did all that he could as an opposition MNA, even his blood pressure shot while fighting the case of Steel Mills in NA’s standing committee back then. Ever since Imran Khan took charge, things had been rather great for PSM. For the 1st time in ten years, my father started getting salaries more frequently than before. In June 2019, all the backlog cleared and in Eid al Fitr, my father also got his June’s salary in advance. But this salaries handout was not a long-term solution.

PSM’s privatization has been the talk of the town since 2008. Sooner or later this steel complex had to get its fate “decided”. The current ECC has just worked upon a financial cost for precisely that.

My take

While the employees have been mentally tormented to the point, I think it’s fair to assume they will take any reasonable amount handed to them as golden handshake and possibly most of them will move towards entrepreneurial ventures of their own. The golden handshake will serve as initial investment for their probably businesses. But this would have been possible in 2020 if we were not hit by a global pandemic.

Unemployment has spiked up all over the world including in Pakistan. Youngsters who were already jobless have had their businesses affected, those on-job have been fired. We’re also expecting the jobless overseas Pakistanis of gulf, UK or US region to also return back.

All of this seems like a huge challenge for the PTI government. I thought the Federal Cabinet might request another fiscal injection or explore any privatization opportunity that retains some of that workforce but even that seems like a gargantuan task in this pandemic.

But then there was Minister Hammad Azhar clarifying how Government of Pakistan will continue to be owner of Pakistan Steel Mills but instead of operator, it will play the role of policy-maker only whereas operations will be handed over to a private entity.

This sounds more like a rental lease rather then completely selling out of a State Owned Enterprise. Things do look brighter for PSM employees this way. And, here’s the good news; Government of Pakistan might still not lose ownership of this mighty steel complex.

The government seems to be in a position for giving golden handshakes for those who wish to part ways from this organization while the ones who want to stick around might be hired by the private operators on a higher salary scale. But the question still pertains, when is this all going to happen. Certainly, doesn’t seem possible until the end of COVID-19 pandemic and then maybe some time more until the whole world returns to “normal”. But one thing makes more sense than anything as of now, in the words of my mother, “If there is any government who can decide the fate of Steel Mills, it’s this one!”


Written by: Aamna Hassan Fasihi

Twitter: @AamnaFasihi