Hundreds of thousands of bank employees, working largely for India’s dominant state-owned lenders, have called off a planned four-day strike after agreeing a 15 percent wage increase, a senior union official said on Monday.
The United Forum of Bank Unions, which says it represents nearly a million bank workers, had called for a strike starting Feb. 25, with demands including higher wages and a five-day work week. Banks in India operate on Saturdays.
A strike would have paralysed some of the country’s largest banks, crippling cash transactions and cheque clearances in an economy where card payments are still unusual. It would have dampened money market and foreign exchange trading volumes, potentially increasing volatility.
The protracted negotiation with unions is also a reminder of the complex task ahead as the government tries to reform India’s network of state-owned banks, which account for more than 70 percent of loans.
Unions reached the wage settlement after 18 rounds of negotiations over more than two years, Vishwas Utagi, a senior union official, said. The new salaries, applicable for more than 700,000 bank workers, will be backdated to November 2012 and valid for five years, he said.
Utagi said the estimated cost for banks as a result of the salary increase will be an annual 47.25 billion rupees ($758.7 million).
As part of the negotiation, the banks and unions also agreed that only two Saturdays a month will be working days.
The Indian Banks’ Association, which was represents the lenders, confirmed the wage revision and the holiday agreement in a statement.
Bank strike called off; unions, IBA agree on 15% wage hike
(PTI) Public sector bank employee unions today withdrew their call for a four-day nationwide strike, with the management agreeing to a 15 per cent hike in wages at an extra burden of Rs 4,725 crore a year and acceding to the demand for holiday on second and fourth Saturdays.
The banks, however, will work full-day on remaining Saturdays instead of the current practice of half-day.
“In today’s talks with Indian Banks’ Association (IBA), wage revision has been settled at 15 per cent with effect from November 2012,” United Forum of Bank Unions (UFBU) Convener M V Murali told PTI.
“The cost of medical, hospitalisation scheme and on other items and the cost of superannuation, namely PF/Gratuity/pension is being separately worked out,” he added.
The wage revision would benefit about 8.5 lakh employees and officers in 45 banks, including old generation private sector banks and a few foreign lenders.
Wage revision in PSU banks is done every five years. The previous revision was agreed upon in 2007.
At a meeting in Mumbai, PSU banks employee unions and bank management IBA agreed on wage hike and entered into an MoU in this regard.
“The IBA is pleased to announce conclusion of the 10th bipartite wage negotiations with bank unions and associations to be effective from November 2012. The agreement reached provides for 15 per cent increase in pay,” IBA Chairman T M Bhasin said in a statement.
Banks have been making provisions for 15 per cent wage hike in their balance sheet since November 2012.
The unions had threatened to go on four-day strike from February 25 demanding a 19 per cent hike in wages.
“The wage revision is effective from November 2012 and new pay scales will be constructed after merging corresponding All India Consumer Price Index, which was 4,440 points as on November 2011 and works out to be 60.5 per cent, with DA and adding a load factor of 2 per cent on basic pay,” AIBEA General Secretary C H Venkatachalam said.
Both the parties have agreed that within 90 days they will finalise other issues and a bipartite settlement will be signed, he added.
Following a formal agreement, he said, RBI would be informed about changes in working hours on Saturdays.
After RBI’s notification, changes in banking hours on Saturdays would come into force, so the new system would take some time, he said.