Bank employees salary negotiation: What has stalled a settlement for over two years

By: |
October 29, 2019 5:46 PM

Protracted negotiation over the wage revision settlement, which is due for two years, has disappointed the bank employees.

Bank, Salary, Wage, IBA, UnionSalary revision is due for nearly 14 lakh bank employees.

Bank Employees Wage Revision: A wage revision settlement for over 10 lakh bank employees and officers has been stuck for two years due to serious differences between the bank management and unions. According to banking industry sources, though there was a broad agreement over the Indian Banking Association’s offer of a 12% hike in the wage cost but the talks were derailed for over a year as four officers associations wanted the inclusion of bank officers of all seven scales in the proposed settlement. In addition to this, now a majority of unions and associations are not willing to accept less than 15% hike which was the case with the last wage revision settlement that was applicable for a period of five years, from 2012 to 2017. Bank employees are also pressing for the merger of special allowance with the basic salary to enhance the pension benefits of the retired staff, a tricky issue as it will considerably increase the pension cost of the banks.

“On Thursday, it will be two years of the last wage revision settlement in the banking sector which was valid till October 31, 2017,” said Ashwani Rana, former general secretary of the National Organisation of Bank Workers.

Upheaval in the banking industry

The country’s banking sector has seen a lot of churning and agitation in the last two months over the stalled wage revision settlement and other issues. All four associations of bank officers – AIBOC, AIBOA, INBOC, and NOBO- have called for a two-day nationwide strike in the last week of September which would have resulted in the closure of banks for four days due to weekend holidays. However, they decided to call off the strike at the last moment following a meeting with finance secretary Rajiv Kumar.

This month, over 10,000 employees of Rajasthan Marudhara Gramin Bank were on strike for over two weeks against the cross-selling of third party products like insurance and mutual fund through bank branches. As if this was not enough, two employee unions AIBEA and BEFI went ahead with one day strike on October 22 against the Modi government’s decision to merge 6 PSU banks with 4 larger ones to achieve the economies of scale. Though the government tried to pacify the two unions as banks were already shut for a day on October 21 in two states – Maharashtra and Haryana – due to assembly elections but failed to persuade them. The strike partially hit the banking operations across the country.

ALSO READ: Modi’s mega bank merger: Indian lenders still dwarfs on global stage; only one bank among top 100

Protracted negotiation over wage revision cause resentment

According to banking industry sources, banks have recruited a large number of young talent in recent years that is impatient with the state of affairs. Protracted negotiation over the issue of wage revision has disappointed them.

“These young employees want to achieve the result through strikes, they are impatient by nature,” a senior office bearer of the National Organisation of Bank Officers told Financial Express Online.

As against the earlier broad agreement over a 12% hike offered by the IBA, now a majority of bank unions are demanding a minimum of 15% hike in the payslip cost due to protracted negotiations.

According to the minutes of the meeting prepared by the bank unions, a copy of which was reviewed by Financial Express Online, IBA estimates that a 12% hike in payslip cost would entail an additional expenditure of around Rs 6,400 crore. And the inclusion of retirement benefits will take up the cost to around Rs 12,000 crore. The IBA urged the unions to accept the proposal, however, the majority of bank unions refused to budge.

“We want more than 15% hike which was given the last time and they (IBA) have offered 12%. We won’t settle for anything less than 15% in any case,” said a senior office-bearer of the National Organisation of Bank Officers (NOBO), who was present in the meeting with IBA in Mumbai.

ALSO READ: Top Heavy: Indian banks have more officers than clerks; how the situation changed in just 15 years

Demand to merger special allowance with basic salary of bank staff

Another tricky issue that has been stalling a wage revision settlement is the demand of bank employees to merge the special allowance with the basic salary paid to them. At present banks pay a special allowance at the rate of 7.75% of the basic salary. However, since this special allowance has not been merged with the basic therefore it is withdrawn at the time of retirement of bank staff that results in reduction of terminal benefits i.e. pension paid the retired staff.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Bank unions threaten two-day nationwide strike against proposed privatisation of PSBs
2Srei: Administrator admits Rs 22,910 cr claims from banks
3ESG, Green bond issues rise sharply in 2021 as Indian firms promote sustainable business