VOLUNTARY RETIREMENT SCHEME (VRS)

VRS - the Concept

The advent of computers in all spheres of commercial activity in recent years has resulted in a surplus in the workforce of most establishments and industries. Downsizing became fashionable and while these organisations could post better performance results with a leaner workforce - obviously benefiting from lesser wage disbursements, retrenchment of the surplus staff was not a viable alternative in the labour scenario in our country. The presence of labour unions and the 'mileage' that rival political parties could extract from such a situation has always precluded the implementation of retrenchment as a policy. Most of the organised labour, especially in the public sector, was cocooned and cosseted in job security, with superannuation and death-in-harness being the only ways that an employee would exit the workforce. An incentive was needed to coax the employee into accepting premature retirement. Thus the Voluntary Retirement Scheme was born.

The Voluntary Retirement Scheme (VRS), also referred to as the 'golden handshake', envisaged the payment of a lumpsum amount apart from the usual retirement benefits like Provident Fund, Gratuity, Pension, etc., to entice an employee into premature retirement. If the lumpsum amount was meagre, the scheme would find no takers and if it were too much, the very purpose of the whole exercise (to project a better bottom-line) would be defeated. A computation based on the number of years of service completed was compared with one based on the years of service remaining, and the lesser figure represented the employee's entitlement on accepting VRS.

VRS - the Liability

Form the point of view of the paymaster-the employer Organisation, though the overall lumpsum outflow would be enormous, the subsequent savings will be considerable as far as future wage bills including prospective increments and allowances, and provisions for employee welfare (like hospitalisation, leave travel, subsidised benefits, loans at negligible rates of interest, etc) are concerned. It has been estimated that even with taking into account the cost factor for raising the requisite funds, the VRS liability would be wiped off in about four or five years and each succeeding year, the benefit of the leaner wage-bill would accrue to the organisation in perpetuity.

VRS -the Viability

Once this scheme was announced, there was a flurry of activity - employees checking on their eligibility, the actual lumpsum they would be entitled to, discussing the pros and the cons within themselves and with their colleagues and families, their future course of action, etc. Complex forces came into play. What to do with the time at one's disposal, how to protect the money being received as compensation, how to meet the day-to-day expenses of running one's household, what standing will one have in Society as a retired person, will one continue to command respect from family and relatives, were the kind of thoughts that flooded their minds.

Some of the employees could focus on the situation and come to a quick and clear 'yes or no' decision. To those who could find an alternative source of employment based on their skills or educational qualifications, or who could confidently consider starting their own business, this opportunity was like a godsend. To some, it was more like getting a chance to take things easy what with their personal commitments to family having been completed. Some employees found that with their newfound financial freedom, they could devote more time to charity and community service or channelise their creativity.

The lot of those with a wavering mind was pitiable. The decision that needed to be taken was by no means a trivial one: it was fraught with irreversible consequences that would last at least a lifetime. It could and would affect not just the individual, but his family too. In effect, each had to draw a personal balance-sheet with each plus point and minus point taken into consideration, before arriving at the decision. And since all this would directly affect the concerned employee, no outsider could help with the decision-making. To some, the lack of self-confidence in handling these finances in the context of familial pressures was too real. The demand for monetary assistance from sons or sons-in-law yet to stabilise themselves in the commercial firmament and not being able to say "No" firmly could jeopardise the financial future of the retiree who will be all too dependent on the returns from the amounts received under VRS, now that there would be no more salary to look forward to on payday.

The VRS Optee

Once the decision to opt for VRS was taken, the optee would start to look into the various venues open. Many of the younger optees with impressive educational qualifications and job experience found it easy to step into an alternative job, sometimes with a better paycheck. One hotshot junior executive with a foreign bank found herself at the receiving end of a 'golden handshake' when the bank decided to wind up its automobile finance business by selling this off to another foreign bank. After accepting the hefty compensation, this executive stepped into the other foreign bank which had just taken over this division, introduced herself as the one who had been handling this business earlier, and sought employment! It was a win-win situation because the other bank was only too happy to find someone who was familiar with the clientele and the job, while the executive continued with her job. Private banks and foreign banks lapped up a lot of executives who opted out under VRS. There were others with entrepreneurial skills, who now had the wherewithal to chart their own future by starting up commercial ventures on their own. Some with an artistic bent of mind could devote time and money to cultural and intellectual pursuits. And some service-minded individuals could now afford to serve the community full-time without disastrous financial consequences. Some could spend quality time with their family which had been relegated to second place due to official prerogatives.