It is often said that for the employees concerned, the voluntary retirement scheme is hardly ever voluntary. The statement refers to the pain that is inevitably involved in the process. The most recent sector to experience such pain has been the public sector banks which, in the five months between November 2000 and March 2001, trimmed its workforce by nearly 12 per cent when 100,000 persons chose to opt for VRS. This was a remarkable achievement for two reasons. First, this brought down staff costs by about 10 per cent. Second, the reduction was carried out without any major disruptions despite a very powerful trade union presence within the work force. A recent report suggests, however, that results of the downsizing have not been altogether beneficial for the banks concerned. The pace of the reduction adversely affected some banks: one bank found that it had lost 25 per cent of its workforce. There was also the feeling among many banks that they were losing personnel, especially at the officer level, who were crucial for maintaining operations. One consequence of this has been the undesirable promotion of clerical staff to the officer level and thus further reduction in efficiency. Another aim of the downsizing has also been belied by the exercise viz., change in age profile. No such change is observable.

These consequences and implications are by no means unique to public sector banks. Previous experience of the VRS should have made these features entirely predictable. The fact that the features were replicated for the banks only suggest that they went into the exercise with their eyes shut. The common preparations that underpin the VRS — counselling being one very crucial item — were ignored. In other words, the humane side of VRS went by the board. In India, it is too much to expect that policy-makers will learn from experience. If the proper lessons are not drawn from the experience of the banks, then other sectors opting for VRS will be similarly affected. This will only serve to give economic reforms a bad name.