Coal India agrees to 20% wage increase

KOLKATA (miningweekly.com) – Coal India Limited (CIL) will on Thursday sign a long-term wage agreement with trade unions, conceding to an average 20% hike against trade unions’ demand of a 25% rise.

The National Wage Agreement X will benefit an estimated 370 000 workers and payments will accrue with effect from June 2016.

Trade union representatives billed the agreement as a “victory”. Unions initially asked for a 50% increase, but lowered the demand to 25%.

As reported by Mining Weekly Online, earlier in the month, at the preliminary rounds of wage negotiations CIL had taken a hard stand maintaining that the country’s largest miner would not commit to any specific percentage hike in minimum guaranteed increase in wages of workers and that any increase would be linked to cash available on the balance sheet of the company.

No details were readily available on the quantum of incremental cash outgo resulting from the 20% hike in wages.

However, according to sources in the company, the increase would roughly entail an additional $1.28-billion on higher wages and arrear payments in the current financial year, while CIL had so far provided for around $437-million for a higher wage bill and that this increased wage bill was expected to impact the bottom line of the miner by the end of 2017/18.

For the record, in National Wage Agreement IX, signed five years ago, CIL’s wage bill was inflated by around $781-million, at current exchange rate of the Indian rupee against the dollar. However, CIL officials maintained that the impact of the higher wage bill would to a large extent be offset by the miner increasing coal volumes offered through the e-auction route, wherein the miner would be able to secure higher margin realisations compared to supplies through linked long term agreements.