IBA sticks to wages stand

At 9.5% rise in wage bill, the average raise per employee is 30%

The Indian Banks' Association is offering the 10-lakh public sector bank employees a 9.5 per cent increase in wage bill under the 8th bipartite wage agreement against the unions' demand of a 17 per cent to 18 per cent hike.

Even at 9.5 per cent increase in the total wage bill, the average increment for every single bank employee would go up around 30 per cent compared with the previous hike in 1997.

This means a bank officer who received a hike of Rs 2,000 then, stands to get an additional Rs 2,500 per month. Likewise, the incremental hike for clerical staff could rise to Rs 1,550 against Rs 1,200 last time round.

Similarly, peons and sub-staff could see an increase of Rs 900 against the Rs 700 they got back in 1997.

Following the last bipartite agreement signed in 1997, the wage bill has risen from Rs 11,000 crore to Rs 17,000 crore, demonstrating an increase of 54 per cent in the last five years. This means a rise of more than 10 per cent each year.

"Even if one were to calculate the inflation, which has till late been less than 5 per cent, bank employees have been adequately compensated. Their wage increase has been in real terms better than others," said H N Sinor, chief executive, IBA.

PSU banks need to compete today and break free from old legacy issues in terms of dismantling restrictive practices like bipartite agreements on salary revision, said Sinor.

The 8th bipartite agreement for the next five years is likely to be the last of its kind as the sector will see a consolidation and PSU banks will gain board autonomy, he added.

"Tagging hike in salaries to the entire wage bill is no longer relevant considering that one lakh employees opted for the voluntary retirement scheme. IBA's proposal to hike the wage bill by 9.5 per cent would mean bank employees would get 135 per cent of what they were offered last time," said Sinor.

The proposed rise will have a further impact taking into account dearness allowance, he added. A 9.5 per cent rise in the wage bill will mean banks will need to shell out an additional Rs 1,595 crore.

Even after a series of 85 negotiations over the last 20 months, bank unions and IBA have yet to come to some level of agreement.

The nine unions/associations under the umbrella of the United Forum of Bank Unions have declared a two-day strike in October beginning, protesting for a higher wage bill package.

Bank management feel that unions calculating per employee income and profitability a misnomer, since a large portion of banks' profits have been through treasury income.

"This is not a regular or sustainable source of income. One needs to look at core profits, net of treasury gains, which have not seen that kind of increase. This is largely on account of competition and pressure on interest income," said Sinor.

Unions are fighting on the grounds that employee productivity in terms of business and profitability have almost doubled since 2000 to today, and the management ought to share the benefit with the staff.

The net profit of 27 public sector commercial banks has risen from Rs 4,317 crore in 2000-01 to Rs 12,295 crore in 2002-03, and higher in fiscal 2004.