...and eating it too

India's bank unions have developed an effective force multiplier. They threaten to go on strike just before a string of public holidays. By doing so, they not only get themselves long holidays but also manage to coerce the government into submission. This has happened once again. The unions""of officers and workers, both""had threatened to go on strike for three days from March 28 because as many as four festivals have bunched up around then along with a week-end. Had they done so, most of the banking system in India would have remained shut for seven days. Sticking to the script, the finance ministry agreed to consider their demands sympathetically. The general secretary of the All India Trade Union Congress, Gurudas Dasgupta, after meeting the finance minister said in classic double-speak (because the strike was called off) that "the decision to strike work stands till the demands are reasonably met". If not, well, another threat will be issued.

What are the unions, with nearly a million members, demanding? They want the additional option of pension (the existing benefit being the provident fund, or PF, which is designed as a form of long-term saving), and the stopping of outsourcing. They also want "compassionate" appointments, and vacant posts to be filled. Take pensions first. When they were given the option to choose between pensions and the PF, those who were tempted by the higher returns on PF deposits opted for it. Many then withdrew their PF balances either partially, as the law allows them to on specific occasions, or took loans against them, by misstating the purpose. Then the return on PF started coming down while the loans still carry the older, higher rate of interest. Now these people find that they have neither a pension nor much by way of balance in the provident fund. So what better than to demand that they too should be allowed to opt for pensions?

The bank managements naturally refused, whence the threat of strike. The government did nothing for six long weeks and then, faced with such a long shut-down of the banking system, seems set to cave in. The unions have said they will send in their proposals by April 30. The whole matter will then have to be settled by June 30. The difference in pay-outs is calculated as being between Rs 4,000 crore and Rs 5,000 crore. It is worth asking who will bear the additional cost, the banks or the government?

The government is also likely to agree to the demand for "compassionate" appointments. The unions say that if a member dies while in service, someone from his or her family should be given a job in the bank. In effect this means that the banks will have take on a fresh liability for 35 years when they are trying to downsize. To make things even harder for the banks, the government is said to be considering a ceiling on the number of jobs that can be outsourced. This will hit the private banks very hard because they outsource a lot of their front, middle and back office work, and it will also come in the way of increased efficiencies in the public sector banks. Bank customers will pay the price.