$5 billion salary dispute poses a new threat to India's coal supply

6 Jul 2022 , 08:45 AM

A significant labor union at Coal India Ltd. has warned that workers may go on strike if compensation hikes aren’t finalized on time, which could make it more difficult to supply the rising demand for fuel.

One of the major unions, Akhil Bharatiya Khadan Mazdoor Sangh, was represented at the conference by Sudhir Ghurde. The talks held on July 1 failed to produce a salary accord.

Workers are asking for a 47% pay boost after initially demanding a 50% increase, while Coal India has only provided a 3% increase. In a letter to the country’s coal minister Pralhad Joshi, a group of unions pleaded with him to step in and assist the parties in reaching an agreement.

It stated that negotiations were still ongoing and that it typically took time to reach an agreement. The coal ministry’s response to a different email was the same as Coal India’s reply.

The state-run miner is attempting to increase output as India deals with increased demand brought on by a post-pandemic economic rebound and the oppressive summer heat, raising the possibility of unrest. The high cost of coal imports, with seaborne prices trading at about a record, is another obstacle to efforts to prevent a repetition of the compression of an energy supply that occurred last year.

The salaries of non-executive employees, who make up 94% of Coal India’s workforce, are updated every five years. The most recent arrangement will be implemented retrospectively when a settlement is reached and is meant to cover payments starting in July 2021.

The cost of salaries at Coal India was 407 billion rupees ($5.2 billion) for the 12 months that ended in March, an increase of around 6% from the prior year. The corporation spent more than a third of its earnings on compensation despite having higher production expenses.

The salary negotiations are taking place when food and fuel prices are rising globally, the rupee is losing value, and inflation is roiling the government’s finances.