Negotiations on public sector bank wage revision are close to completion with the final contours of the package expected to be worked out in one or two meetings.
The unions and bankers met On Wednesday, but there was still a lack of clarity on the final outcome, said a bank chief. “We are working on a few variables such as the second pension option and a variable pay structure. The final outcome will depend on how we deal with these two issues,” the bank chief added.
A bank union functionary associated with the negotiations said the banks have improved the earlier offer. There was, however, no major movement. While the unions have turned down the proposal for a 10 per cent hike, the banks are keen to ensure that the overall increase is kept under 20 per cent.
Though a date for the next meeting is yet to be fixed, the government is keen that the package be finalised before the elections are announced and is hoping that it would add to the “feel good” sentiments in an otherwise gloomy economic environment.
The government has already announced wage hikes for the central government staff and those working in public sector companies, while employees of PSBs are yet to get a hike. The earlier agreement expired on October 31, 2007, and the revised wages will be applicable retrospectively from November 1, 2007.
Banks have already started budgeting for additional staff costs and some of them have already made provisions for a higher wage bill in their accounts for the last two quarters.
Last month, the unions met PSB employees to gauge their mood and get a feedback before getting into the final huddle with the management. Based on an assessment in line with Institute of Chartered Accountant’s of India’s Accounting Standard 15 (AS-15), banks might have to provide as much as Rs 12,000 crore to meet the pension liabilities.
When AS-15 became operational in 2006, the initial estimate for the additional pension provisioning was Rs 6,000 crore. However, the latest wage revision may bring in an additional 275,000 bank employees who opted for provident fund earlier. The second pension option would require an additional provisioning of Rs 6,000 crore, taking the total liability Rs 12,000 crore.
There are seven pay scales in PSBs, but the difference between private and public sector compensation structure widens as employees move up the hierarchy. An assessment by some of the banks shows that the pay differential on a cost-to-company basis is not significant in the first two grades.
PSBs had 714,793 employees at the end of March 2008, of which State Bank of India and its associates had around 250,000 employees, with the current wage bill estimated at Rs 2,75,000 crore.
