Deal swells wage bill for public sector banks by Rs 2200 cr

Public sector banking industry wage bill is set to go up by Rs 2,200 crore per annum with the signing of the eighth wage settlement today.

A 13.25 per cent increase in the wage bill amounts to an additional outgo of Rs 2,200 crore per annum to make the total annual wage bill Rs 19,000 crore.

The new wage bill is effective from November 2002. The settlement was signed with many bank chiefs, Indian Banks' Association officials and union representatives present at a function here today.

The wage settlement agreement determines the wage structure for five years beginning November 1, 2002, for about 7,57,000 employees working in 27 public sector banks, including officers and other staff. Banks' arrears itself run into over Rs 6,600 crore to be paid to bank employees across the industry.

While several banks have started making provisions for the wage increase; the increase was more than expected by bankers and will have an impact on some banks' balance sheets.

This wage settlement is pathbreaking as for the first time 3.2 lakh clerical staff can be transferred anywhere within a district. Clerical staff have been opposed to transfers for many years now.

Although there is an existing provision to transfer clerical staff within a single language area it has been used sparingly that too only by a few banks.

The new settlement will help create a beginning and settle some of the imbalances, said an IBA official. Clerical staff have also agreed to be transferred outside a particular district provided it is within 100 km.

IBA had earlier proposed wider mobility for workmen in three phases. The first phase is up to 150 km, the second 250 km and the third within the state and to contiguous states. The three phases will be implemented by 2007.

The bank unions, which had several rounds of negotiations with the Indian Banks' Association (IBA) representing banks' managements, have also agreed to unlimited computerisation and upgradation of technology.

Pension benefits have been redefined according to unions demands. Pension will now be calculated on 50 per cent of the last drawn salary.

From 1998 onwards bank managements have been paying retiring employees 50 per cent of about 80 per cent of the last pay. This redefinition involves an extra outgo of Rs 580 crore for banks to cover pension expenditure.

Medical claim benefits have been increased for employees. The claim amounts under various categories have been increased, said an IBA official.